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Europe cheers Alcatel, Unilever
LONDON, England (CNN) -- European markets surged to a finish on Wednesday, as investors cheered strong earnings from Alcatel and Unilever and found comfort in early gains on Wall Street. London's FTSE 100 rose 1.7 percent to 4,002.7 and the CAC 40 blue chip index in Paris gained 4 percent to 3,084.22, while Frankfurt's electronically traded Xetra Dax was up 3.3 percent to 3,122.8 in late trading (the German markets was set to close at 1900 GMT). The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 2.5 percent, with computer services, electronics and information technology sub-sectors leading the gains. With economic data pointing increasingly to a weak recovery on both sides of the Atlantic, analysts say the pressure is now on the U.S. and European central banks to ease monetary policy to help lift markets. "If there are no interest rate cuts before the end of the year, the concern will be that we are going down the deflation road, since economic data is unlikely to turn up of its own accord," Khuram Chaudhry, European equities strategist at Merrill Lynch, told Reuters. "In that environment, markets could retest lows, but if we get the policy response then we'll get more of a rally." Corporate earnings were the focus of European investors on Wednesday, with technology stocks leading the rebound after a huge sell-off in the previous session, which saw markets tumble between four and almost six percent. Providing much of the upward momentum was Alcatel (PCGE), Europe's biggest telecom equipment maker. It soared 40.1 percent to 5.20 euros after sliding more than 10 percent on Tuesday amid fears it may deliver more bad news about the state of the telecoms industry. (Full story) "With available cash rising and debt falling, it looks like Alcatel is in a stronger position than its peers such as Lucent. If there is a survivor of the current turmoil, then it could well be Alcatel," a Paris trader told Reuters. Nokia, the world's biggest mobile phone maker, rose 4 percent to 16.99 euros and Swedish rival Ericsson climbed 7.3 percent to 7.35 crowns. Germany's dominate phone group Deutsche Telekom (FDTE) was up 6.5 percent to 11.74 euros in late Frankfurt trading, while France Telecom (PFTE) closed up 3.3 percent at 11.40 euros. France's STMicroeletronics (PSTM), Europe's biggest chipmaker, jumped 9 percent to 19.78 euros, while Germany's Infineon Technologies (FIFX), the region's No. 2 chipmaker, was up 5.7 percent to 9.85 euros in late Frankfurt trading. ASML, the Dutch semiconductor equipment maker, gained 11.5 percent to 8.60 euros. Siemens (FSIE), the German electronic and engineering giant, was up 7.4 percent to 45.60 euros in late trading. Meanwhile, Anglo-Dutch consumer products group Unilever (ULVR) gave investors another reason to buy into the market. It rose 6.4 percent to 615 pence after saying third-quarter net income rose 17 percent and raised its earnings for the full year. (Full story) Volkswagen (FVOW), Europe's biggest car maker, was up 0.6 percent to 36.40 euros in late Frankfurt trading. The company said third-quarter pretax profit almost halved but stuck to its already-lowered target for the full year. (Full story) Deutsche Bank (FDBK) which posts its third-quarter results on Thursday, was up 7.2 percent to 43.70 euros in late trading. The AEX index in Amsterdam rose 3.7 percent, Milan's MIB30 index gained 3.1 percent and the SMI in Zurich added 2.8 percent. In the U.S. on Wednesday, markets were modestly higher in quiet trading as investors braced for a slew of key economic reports later in the week. At 1540 GMT, the Dow Jones industrial average was up 20.53 points to 8389.47 and the Nasdaq composite gained 17.37 points, while the Standard & Poor's 500 index rose 5.40 points to 887.55.
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