European Midday Update: Bid News, Rumors Drive U.K. Market Up

LONDON -- Pent-up energy from the long weekend meant the U.K. markets got off to a roaring start, with bids -- both actual and rumored -- plus earnings from a couple of FTSE 100 heavyweights adding fuel to the fire.

The Footsie moved up rapidly in early trading to stand 56 points higher, and by midmorning the index had gained further: up 73.0 points to 6289.9.

Vodafone AirTouch (VOD), up 13p to 295 ($4.43), was responsible for a hefty part of the gain following annual profits at the top end of market expectations and the well flagged disposal of its Orange mobile telephone subsidiary to France Telecom (FTE). Warburg Dillon Read has the stock as a strong buy, with a target price of 530p. Merrill Lynch and Credit Lyonnais are also keen on the stock. France Telecom fell 3.80 euros to 140.60 amid concern about the price for Orange.

In other telcos, British Telecom (BTY) gained 30p to 927 as investors shrugged aside the regulatory ruling that it must offer wholesale unmetered Internet access to MCI Worldcom (WCOM) and other operators who request it.

A genuine bid this morning came from nevadatel.com -- a joint venture by subsidiaries of Energis (ENGSY) and Viridian -- for boutique telco Stentor. The recommended offer is 29.3p per share. Energis rose 55p to 24.00, but Viridian is unchanged at 740.

The Techmark index shot up 98.8 points to 3105.0, boosted by good support for technology stocks across Europe. Freeserve (FREE) was the bid speculators' favored tech play this morning, the shares rising 110p to 502 on expectations of an offer from Germany's T-Online in the near future. Dixons(DXNGY), the 80% owner of Freeserve, gained 34p to 308. Dixons must hold on to its stake in Freeserve until the Internet service provider publishes its annual results on June 27. T-Online was up 1 euro to 38.75.

Leading the tech stocks higher was ARM Holdings (ARMHY), which gained 45p to 590. Baltimore Technologies (BALT) was in demand this morning after the decision to merge its Japanese subsidiaries; it rose 22p to 412.

Perpetual, the U.K. fund manager, jumped 100p to 38.50 as the company confirmed that it has received a number of bid approaches. Perpetual has appointed Merrill Lynch and Cazenove to conduct a review of its strategic options. Amvescap (AVZ) has withdrawn from the bidding race and decided to promote Invesco, its own retail and institutional brand, instead.

Oils were mixed. Shell (SC) added 6p to reach 541, but BP Amoco (BPA) was that much cheaper, hitting 594.

Most of Europe's other major stock markets were in positive territory, with the Xetra Dax in Frankfurt up 53 to 7069.7 and the CAC 40 in Paris up 16.5 to 6221.7. The Neuer Markt's tech-heavy Nemax 50 index was up 63.2 to 5808.6.

In Frankfurt, blue-chip techs were mixed, with Siemens (SMAWY) near unchanged at 156.02 euros ($144.57), Epcos (EPC) up 1.09 euros to 124.25 and software maker SAP (SAP) down 5.49 euros to 542.00.

Telefonica (TEF) climbed 0.66 euro to 21.31 and Deutsche Telekom (DT) rose 2.38 euros to 58.62 after the company released details of the upcoming share sale of 7% of the German government's stake.

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