D Telekom’s US sale helps galvanise Frankfurt

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Deutsche Telekom led a surge on Frankfurt’s Xetra Dax index after it attracted upgrades following the decision to sell its T-Mobile USA unit to AT&T.

The sale of the asset for $39bn the biggest global M&A deal so far this year– the biggest global M&A deal so far this year – lifted Telekom’s shares 11.3 per cent to €10.67.

The company said it would return cash to shareholders and refocus its strategy on Europe, prompting a wave of upgrades.

Commerzbank lifted its rating from “hold” to “buy” and raised its price target from €10 to €13, while WestLB upgraded the stock from “reduce” to “buy”.

RBS, which maintained its “hold” rating, said: “We expect investors who back an ultimately successful closure of this transaction, despite the hurdles and complexity, will be rewarded.”

Germany’s Xetra Dax index climbed 2.3 per cent to 6,816.12, outperforming the pan-European FTSE Eurofirst 300 which added 1.8 per cent to 1,107.89.

Chipmakers rebounded as concerns over the impact of the loss of production in Japan abated. Germany’s Infineon, which said it would feel little impact – either on its end users, or from suppliers of components or equipment, gained 5 per cent to €7.17. Rival STMicroelectronics rose 3.2 per cent to €8.58.

Improved risk appetite helped financials. Austrian bank Raiffeisen rose 3.6 per cent to €40.13 and France’s Société Générale added 3.6 per cent to €48.12.

Insurers also enjoyed a rally as concerns over their liabilities to recent natural disasters eased. Ageas of Belgium climbed 6 per cent to €2.17, while France’s Axa added 3.7 per cent to €14.53.

Swiss Re, the reinsurance group, which on Monday estimated the cost of its exposure to the Japanese earthquake at $1.2bn, rose 1.7 per cent to SFr50.85. German rival Munich Re rose 2.2 per cent to €110.10.

German truckmaker Man rose 3.6 per cent to €84 after raising its dividend to €2 a share, beating expectations of a €1.40 payment.

The company also stoked the flames of merger speculation after it said it aimed to forge closer ties with Swedish rival Scania, a decision which carmaker Volkswagen – an important shareholder in both companies – has been trying to foster for years.

Shares in Scania rose 2.7 per cent to SKr137.90, while VW added 3.8 per cent to €105.75.

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