The sale of a large stake in Hellenic Telecom on Thursday provided Greece's privatisation highlight of the year and helped European equity markets fight back after five sessions of losses.
The fixed-line incumbent, also known as OTE, was the biggest blue-chip winner after the Greek government sold a 10.7 per cent stake aiming to raise about EU1.1bn. The shares were thought to have been sold at the top end of a range between EU20.80 and EU21.40 a share.
Analysts said efforts to find a strategic partner for the company had failed, leading the state to divest itself of the stock. Speculation that further divestments could pave the way for a takeover of the company lifted the shares 6.5 per cent to EU22.80.
The FTSE Eurofirst 300 index rose 1 per cent to 1595.82.
Deutsche Postbank, Germany's biggest retail bank, gained 4 per cent to EU64 after Commerzbank said it would be interested in a making a bid. Wolfgang Hartmann, executive board member, said in an interview on Bloomberg TV that if Deutsche Post, the majority owner of Postbank, was ready to sell, Commerzbank would "immediately snap it up". Commerzbank shares rose 1.4 per cent to EU34.97.
Deutsche Post, which responded by saying it had no plans to sell its stake, rose 0.8 per cent to EU23.65.
French information technology consultancy Cap-gemini rose 4.6 per cent to EU53.78 on talk that Infosys, its Indian rival, was considering making an offer.
Traders said that Infosys could be targeting the French company because of its large outsourcing operations in India and to give itself a foothold in European markets.
Meanwhile, Dutch technology group Getronics gained 4.79 per cent to close at EU5.47 on speculation it might in turn be a target for Capgemini.
Rumours that Porsche may again be building up its stake in Volkswagen left VW shares 2.7 per cent higher at EU116.65. Porsche, which owns a 31 per cent stake in Europe's largest carmaker, rose 2 per cent to EU1,315.25.
Gains for commodity prices helped European oil and metals groups, as well as the companies that provide them with equipment and services.
Norway's Statoil (NYSE:STO) rallied 4.4 per cent to NKr179.50 while metals group Norsk Hydro (NYSE:NHY) added 3.9 per cent to NKr224.50. Salzgitter, the German steel producer that was recently granted approval to buy Vallourec's steel tubes unit, gained 4.3 per cent to EU143.37.
Saipem, the oilfield services group, rose 4.8 per cent to EU24.99 after Goldman Sachs said it was comfortable with the group's medium-term outlook. The broker removed the stock from its "convicton sell" list and raised its rating to "neutral".
Metso (NYSE:MX), the Finnish manufacturer of mining equipment, rose 2.1 per cent to EU43.90 after Credit Suisse raised its target price on the stock from EU40 to EU48. The broker said the outlook for mining equipment was robust, "with still two years of good order growth".
Shares in German industrial gases group Linde gained 4.4 per cent to EU88.
Swiss food producer Nestle rose 2.8 per cent to SFr461.50 after Deutsche Bank raised its rating from "hold" to "buy", saying investors had pushed concerns over commodity cost inflation too far.
The broker also said that it expected value to be created through the possible sale of its majority stake in US eye-care company Alcon.
Strong gains for tyremakers were driven by news that Japanese manufacturer Bridgestone had raised its full-year profit guidance.
France's Michelin climbed 2.3 per cent to EU102.34, while Germany's Continental added 2.7 per cent to EU103.10.
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