European Midday Update: Telecom Revival Inspires Modest Rally - TheStreet

LONDON -- Over the last three trading sessions, the FTSE 100 has fallen 2.6%. This morning, however, the Footsie started with a 30-point gain despite Wall Street's overnight fall and by midmorning stood 62.5 points higher at 6301.5. Tech stocks too showed signs of life, and the Techmark was 27.5 points higher at 3348.3.

The telecom sector took a severe battering on Thursday for as many reasons as you can think of:

Telewest's

(TWSTY)

$450 million bond issue, the warning from

Ericsson

(ERICY)

that the massive sums of money for third-generation mobile phone licenses will impact on costs and margins in the sector and weakness in

Deutsche Telekom

(DT) - Get Report

about the cost of buying into the U.S.

But after a good night's sleep, things don't look so bad.

Vodafone AirTouch

(VOD) - Get Report

, which Thursday performed a like a heavyweight boxer that was punch drunk, rose 9p to 273 ($4.15).

British Telecom

(BTY)

gained 14p to 874 and

Colt Telecom

(COLTY)

was 51p higher at

21.95.

But the recovery didn't reach Telewest; the shares remain on offer and are 6p down at 229.

The drug and biotech sectors, which have enjoyed a recent run-up on the human genome announcements this week, encountered some profit-taking this morning.

Oxford Glycosciences

, one of the principal star performers, fell 20p to

19.35.

Betting concern

Hilton Group

came under selling pressure and dipped 13p to 225 as

Lehman Brothers

downgraded the stock from buy to neutral. The Lehman Brothers also removed Hilton from its recommended European portfolio because of the cost of investing in the Internet and lower expected profits from telephone betting.

Europe's other major stock markets were mostly higher early Friday, with the

Xetra Dax

in Frankfurt up 36.56 to 6911.10 and the

CAC 40

in Paris 76.72 higher to 6477.54. The

Neuer Markt's

tech-heavy

Nemax 50

index, perhaps burdened by a report the Germans were cooling to a joint European technology exchange with

Nasdaq

, was down 19.9 to 5928.7.

Rebounding from Thursday's losses,

Deutsche Telekom

(DT) - Get Report

was up 1.10 euros to 59.80 ($56.36). Elsewhere,

France Telecom

(FTE)

was up 0.10 euro to 150.00 and

Telefonica

(TEF) - Get Report

was 0.56 euro higher to 22.06.

Some blue-chip German tech shares were able to repair a bit of the damage done in Thursday's big tech selloff, but others just kept sliding.

Siemens

(SMAWY)

was up 1.88 euros to 156.50 and

Infineon

(IFX)

was 1.95 euros higher to 68.54, but

Epcos

(EPC) - Get Report

tanked 8.23 euros, or 7.4%, to 102.77.

Car and financial shares, on the other hand, were helping prop up the Dax.

Volkswagen

(VLKAY)

climbed 0.84 euro to 40.31 and

Dresdner Bank

(DRSDY)

was up 0.44 euro to 42.25, amid reports a merger with

Commerzbank

(CRZBY)

could be announced in the couple of weeks.