Euro shares hit seven-week high in early trade as Tullow plunges
European shares climbed in early trade today, hitting seven-week highs with a flurry of deal activity sparking a sharp rally in the telecoms sector.
Dutch group KPN was up 5.6pc after saying it will sell its E-Plus unit to Telefonica Deutschland for €5bn in cash and a 17.6pc stake in the merged company.
French construction-to-telecom conglomerate Bouygues surged 6pc and SFR parent Vivendi added 3.8pc after saying they entered talks to share part of their mobile networks.
Vivendi shares were also boosted by news that the group is in exclusive talks to sell its 53pc stake in Maroc Telecom to Dubai-based Etisalat in one of the biggest emerging market deals this year.
Energy-related stocks underperformed on the FTSE, weighed down by a 7.4pc slump in Tullow Oil after it announced it had dug a dry well in French Guiana. Tullow saw 45pc of its 90-day average volume traded in early deals.
"When you give an update and say those few words: 'a well is dry', then that just spooks everybody straight away... It was starting to recover from lows around 890, but now a bit of confidence has come out of the company," said Thomas Robertson, sales trader at Accendo Markets.
At 0751 GMT, the FTSEurofirst 300 index of top European shares was up 0.4pc at 1,213.49 points, a level not seen since early June. The STOXX Europe 600 telecom sector index rose 1.1pc.
"The KPN news is good for telecoms overall, it fuels the M&A fever recently seen in the sector," David Thebault, head of quantitative sales trading at Global Equities, said.
"Earnings have also been relatively good so far, although the bulk of results still has to come. We'll have a better idea of the big picture by the end of the week, with the focus mostly on the guidance."
Miners also helped fuel early gains today, after media reports from China that said the government would use railway projects to help cut gluts in steel, cement and other construction materials, and would not let economic growth sink below 7pc.
Anglo American gained 2.5pc and BHP Billiton added 1.9pc. The sector is down 20pc year-to-date, hurt by worries over the pace of economic growth in China.
"Anything even slightly positive coming out of China becomes a trigger because these shares are ripe for a technical rebound," a Paris-based equity and exchange-traded fund (ETF) trader said.
Around Europe, Britain's FTSE 100 index was up 0.5pc, Germany's DAX index up 0.4pc, and France's CAC 40 up 0.3pc.
The euro zone's Euro STOXX 50 index was up 0.6pc, at 2,741.03 points. The blue-chip index has surged 10pc since late June, mirroring sharp gains on Wall Street, where the S&P 500 has hit record closing highs.