IT sector makes good gains led by Alcatel

There were good gains in the IT sector, although shares retreated from their morning highs. Alcatel closed up 4.5 per cent, STMicroelectronics up 3.3 per cent, Sagem up 5.5 per cent and ASM Lithography up 6 per cent.

The winners in telecoms were Deutsche Telekom, up 2.9 per cent to €26.80, KPN up 5 per cent to €13.24 and Sonera, up 3.2 per cent to €10.82. Kaj-Erik Relander, chief executive of Sonera, said Finland's largest telecom operator would maintain its partnership with Turkcell in spite of the Turkish operator's drag on earnings.

In media, there were a couple of stories doing the rounds to liven up the sector. Vivendi Universal was up 2.5 per cent at €79.45 after a report that it may buy US publisher Houghton Mifflin, which surged more than 6 per cent in early trade. Vivendi chose yesterday to launch its counter-proposal on Poland's power and telecom group Elektrim. Vivendi, battling with Deutsche Telekom for the upper hand, proposed Elektrim should be merged with Vivendi's own telecoms unit Elektrim Telekomunikacja. Pan-European broadcaster RTL Group, French broadcaster Canal Plus and marketing group JC Darmon merged their sports interests to create a major European group worth €1.1 billion.

RTL is controlled by Bertelsmann and Canal Plus by Vivendi. The combined sports rights will include Formula One, football and tennis. RTL shares rose 7.9 per cent to €68 and JC Darmon was up 8.9 per cent to €150.40 while Canal Plus edged ahead 0.3 per cent to €3.77.

Club Med fell 2.8 per cent to €78.70 after Lehman Brothers cut its recommendation from "buy" to "market perform" and its target from €100 to €85. Lehman cited the company's profits warning in March when it said the slowdown in the US and Japan would hit its performance.

Lufthansa rose on hopes for a breakthrough in its pilots' dispute plus the announcement of strong annual results from British Airways. At the close of a volatile session, the shares were 2.4 per cent higher at €23.25.