European Midday Update: Telecom Shares Lead Markets Lower - TheStreet

LONDON -- The

FTSE 100

did a fine crab impersonation Wednesday, moving sideways in early dealings. After being up as much as 7 points, by midmorning the Footsie slipped 43.8 points to 6269.7, helped by weakness in the telecom sector. The

Techmark

index of leading technology shares was just 0.6 point higher to 3401.5.

On the downside was

Telewest

(SBH) - Get Report

, which dipped 25, or 10%, to 228 ($3.45) after news that it will issue a five-year $450 million convertible bond. Telewest expects the notes to price today. The lead managers are

Merrill Lynch

and

Salomon Smith Barney

.

This has put the other telecom leaders under a cloud amid fears that others may have to issue bonds to pay for the next rounds of European wireless licenses. Bidding for Dutch licenses starts next Monday and the German round begins on July 31. Also,

Ericsson

(ERICY)

of Sweden has said this morning that it fears mobile phone market growth could slow.

Vodafone AirTouch

(VOD) - Get Report

came under pressure and the shares eased 8p to 278, while

British Telecom

(BTY)

shed 18p to 865 and

Cable & Wireless

(CWP)

slipped 58 to

10.60.

The pharmaceutical sector stayed firm under the lead of

AstraZeneca

(AZN) - Get Report

, which rose 21p to

29.81.

Goldman Sachs

has tagged the stock as market outperform and

Lehman Brothers

has done the same, with a price target of 32.

Glaxo Wellcome

(GLX)

edged forward a few pence to

19.15, as did merger partner

SmithKline Beecham

(SBH) - Get Report

, to 870.

Elsewhere, toy retailer

Hamleys

jumped 7p to 158.5 as the company confirmed a takeover bid approach.

International Greetings

, the designer and manufacturer of greetings products and stationery, advanced 34p to 287 on news that the company has a license to manufacture its products for

Chicken Run

. The

animated film by Nick Park is expected to be a blockbuster.

Europe's other major stock markets were also lower early Friday, with telcos also taking the spotlight. The

Xetra Dax

in Frankfurt was down 131.39 to 6924.66 and the

CAC 40

in Paris was 84.42 lower to 6523.54. The

Neuer Markt's

tech-heavy

Nemax 50

index was down 112.4 to 6026.0.

Deutsche Telekom

(DT) - Get Report

was the biggest loser on the Dax, tanking 3.07 euros, or 4.8%, to 60.52 ($57.04) amid reports the company was preparing a $99 billion bid for

Sprint

(FON)

following the breakdown of its merger with

WorldCom

(WCOM)

.

France Telecom

(FTE)

was off 3.70 euros to 155.20, after the company confirmed it was hoping to buy out Deutsche Telekom's stake in the Italian telephone joint venture

Wind

. In Madrid,

Telefonica

(TEF) - Get Report

was down 0.12 euro to 23.13.

Blue-chip German tech shares were also in negative territory, with software maker

SAP

(SAP) - Get Report

down 9.81 euros to 199.75,

Epcos

(EPC) - Get Report

3.60 euros lower to 117.40 and

Siemens

(SMAWY)

off 2.60 euros to 154.40.