New economy rises as industrials falter

The new economy reasserted itself in Frankfurt, overcoming a black day for the motor sector and sending the Xetra Dax index up to within a whisker of its all-time high.

The FTSE Eurobloc 100 index gained 1.2 per cent to 1,430.94 and the FTSE Eurotop 100 index 1.4 per cent at 3,617.28. The FTSE Eurotop 300 index added 1.3 per cent at 1,543.49.

The main drive came from Siemens and Deutsche Telekom, two leading German technology stocks, and by the close the benchmark was up 91.03 at 7,698.97 just 11 points short of the record set earlier this month.

Siemens roared ahead by 9.4 per cent as the upcoming flotation of the group's Infineon semiconductor offshoot appeared to recapture investors' imaginations. Infineon goes to the bourse starting line next month and has a potential market capitalisation of €20 billion. Siemens ended €15.50 better at €180.60 after hitting a session high of €180.99.

Deutsche Telekom rallied €1.91 to €87.50 amid news of US alliances for its mobile phone arm and speculation that the group was soon to announce a "strategically large" take-over move. Utility RWE, buoyed recently by reports of a data transmission breakthrough, gained €1.16 at €36.51.

Motors moved into the slow lane following news of an unsettling profits slide from Volkswagen which prompted an immediate downgrade to "sell" at West LB. VW came off €2.70 or 6 per cent at €42.30 and other leading motor shares were not far behind. Daimler-Chrysler shed €1.20 at €63.25 and BMW 85 cents at €26.90.

Paris also gained ground in spite of stern shakeouts at Alcatel and Renault. The CAC 40 index ended better 67.94 at 6,031.25. Alcatel gyrated wildly on the news of the $7.1 billion purchase of Canada's Newbridge Networks. The telecoms equipment leader shot up to €249.50 in heavy trading before subsiding to €217, off €20.50 or 8.6 per cent at the close. Turnover was 1.2 billion.

Amsterdam rose 5.24 to 652.52 on the AEX index after powerful runs by DSM and Philips. Lifted by strong results, chemicals leader DSM jumped €3.29 or 10.2 per cent to €35.50 while Philips, buoyed the broad resurgence for tech stocks, added €9.40 at €179.95. In telecoms, KPN put on €1.85 at €117.