LONDON, Aug 19: Vivendi Universal led European shares to their best levels in a month on Monday as the media group took steps to cut it groaning debt, but drug maker AstraZeneca tumbled on concerns over a cancer treatment.
A strong Wall Street, the ease of pushing indices higher in holiday-thinned trade, and little bad news to upset investors also lent bourses much needed backbone, dealers said.
By 1530 GMT and with most stock exchanges shut, the pan-European FTSE Eurotop 300 index was up 2.9 per cent at 991 points after a late surge led by media, tech and telecom shares as Wall Street found a surer footing.
The Eurotop 300 has rallied 15 per cent in the past month after hitting a five-year low on July 24.
On Wall Street, the blue-chip Dow Jones industrial average was 1.7 per cent ahead at 8,930 points, while the tech-laden Nasdaq Composite was also up 1.7 per cent.
Trading volumes are expected to remain light with many dealers and investors away on summer holidays. The earnings season is also winding down.
The Euro Stoxx 50 index of euro zone blue chips gained four per cent to 2,822 points, but fund managers warned that investors may lose their nerve.
Steadier stocks gave investors an appetite for the bombed-out and riskier technology, telecom and media stocks. Financials and insurers, heavily exposed to stock markets, also rose.
Strategists said there was some switching from bonds into stocks amid belief that the long rally in bonds might have peaked. The safe-haven status of bonds was waning as companies delivered fewer shocks to unnerve the equity markets, they said.
Franco-American Vivendi, the world’s second biggest media group, was the day’s top blue-chip gainer. Trading in its shares was halted late afternoon after the stock surged over 20 per cent on hopes of asset sales to cut its 19 billion euro debt pile.
The stock hit multi-year lows last week after losing a quarter of its value on Wednesday due to concerns over solvency.
Jean-Rene Fourtou, appointed CEO of Vivendi last month, said in a letter to shareholders and employees on Sunday that Vivendi would avert a cash crunch with a two-billion euro funding deal with banks by the end of September.
On Monday, Britain’s Vodafone Group said it was in talks about buying all or part of the stake in mobile Internet firm Vizzavi held by Vivendi, though dealers warned that such a sale would only nibble away at the debt pile.
Analysts suggested a price tag for the 50 per cent stake in Vizzavi would fetch no more than 150 million euros, a fraction of the 10 billion euros that Vivendi has said it wants to raise over the next two years through the sale of media assets.
Vodafone shares rose eight percent.
Elsewhere in the media sector, shares in British broadcaster Granada jumped 12.3 per cent, while peer Carlton rose nine percent as both joined forces to boost their advertising revenues and number of viewers.
Meanwhile, Europe’s second-biggest drug maker AstraZeneca said its new cancer drug Iressa failed to boost survival rates for some lung cancers when taken alongside chemotherapy, sending shares in the Anglo-Swedish group sliding 11.8 per cent.
Swedish telecoms equipment maker Ericsson fell by nearly 10 per cent in morning trade as investors continued to sell shares and buy rights to the firm’s new issue to limit potential losses on the stock.—Reuters