20000112

Eurostocks close higher as media zoom on AOL deal

LONDON: America Online's AOL.N $190 billion takeover of Time Warner - the biggest merger in history - lit a fire under Europe's media sector on Monday to push stocks higher and reestablish growth sector leadership after its battering last week.

"The key prizes for the European market in 2000 will remain telecom and high tech stocks, including Internet with the media fully involved," said Alessandro Delia-Russell, head of European research at Banca Akros in Milan.

"I think this is one of the signs that the European media sector might see further consolidation and agreements which should involve the traditional media channels and the Web," Delia-Russell said.

The takeover of a media company by the Internet service provider stoked expectations that European media and Internet counterparts will have to follow suit to marry content with technology.

"A deal of this kind is a wake-up call for Internet access providers all over the world, with alliances between content and access likely to be the theme of the next couple of months," said Miles Saltiel, Internet analyst at WestLB Panmure.

The STOXX European media sector index rocketed 9.44 percent with most of the leading players notching big gains.

Pearson was up 16.11 percent, Canal Plus, 17.06 percent ahead, TF1 rose 19.72 percent, and Wolters Kluwer, was up 10.36 percent.

In the broader market, the Eurotop 300 index gained 1.36 percent, while the Euro 50 index rose 1.41 percent. Both had been more than two percent higher but some late session profit-taking trimmed the gains.

European bourses were helped by the Dow, buoyed by the AOL news, extending Friday's record close in early trade on Monday when the tech-laced Nasdaq also chalked up strong gains.

Techs and telecoms also outperformed, along with pharmaceuticals, construction and consumer cyclicals.

But there was little sign of the strong sector rotation into defensives and cyclicals that was seen last week when the growth stock sector took a hammering. On Monday, defensive food and beverages closed lower, along with basic producers and energy.-Reuters