European stocks extend gains

February 26, 2002 Posted: 0912 GMT

LONDON, (Reuters) - European bourses stretched tech-led gains on Tuesday morning after the German Ifo index of business sentiment came in higher than expected, reinforcing Wall Street's overnight economic optimism.

"We're getting more and more background news that this recovery is coming and will, probably, be stronger than many investors are anticipating. So economically-sensitive names should do well," said Nigel Cobby, managing director of European equities at Deutsche Bank.

However, Swiss Re came under some selling pressure after the Swiss insurance giant said it saw a net loss of 200 million Swiss francs in 2001 against expectations of a handsome profit, as it brought forward charges related to September's attacks on the United States.

At 0910 GMT, the blue-chip FTSE Europtop 300 index was up 0.72 percent, and the narrower DJ Stoxx50 leapt more than one percent.

The influential Ifo survey of business sentiment in Europe's largest economy rose to 88.7 in February, against consensus expectations of 87.3 and a revised 86.2 in January.

In New York, the Dow Jones industrial average breached the psychologically important 10,000 points mark and raced to its highest close since the second week of January, adding 1.78 percent, after data showed U.S. home sales rose by a record 16.2 percent in January.

The tech-heavy Nasdaq Composite leapt 2.63 percent, its biggest one-day percentage gain since January 3.

Tech shares led the move higher in Europe, with world No.1 mobile phone maker Nokia of Finland and Dutch electronics giant Philips both up over three percent.

The DJ Stoxx technolohgy index was the biggest sectoral riser, with a gain of 2.38 percent.

This was despite a profit warning after the bell from U.S. contract handset manufacturer Flextronics International , which countered earlier, more upbeat guidance from wireless technology firm Qualcomm Inc and General Motors.

SWISS RE Shares in Swiss Re fell over two percent after the world's number two reinsurer posted a small loss compared with a consensus analyst forecast of a net profit of 1.5 billion francs, although analysts had already warned that a small loss was possible depending on how Swiss Re digested its losses as a result of September 11.

Swiss Re decided to take the lion's share of the costs related to September 11 from its 2001 results, leaving its reserves for future losses largely intact, and predicted a sharp upturn this year, which traders said could pare losses as the morning wore on.

Shares in Thyssen Krupp fell 1.13 percent as investors homed in on the German lifts-to-steel giant's statement that sales in the current fiscal year would not match the pace set in 2000/01.

That was despite a pretax profit in its first quarter of 28 million euros, against expectations of a 44 million euros loss.

Tyremaker Michelin added 2.53 percent after reporting a 25.8 percent decline in 2001 net profit to 296 million euros that was a little short of expectations.

Dealers attributed the gains to the fact that Michelin's operating margin at 6.6 percent came in at the top end of expectations and to a sense of relief that the figures had not been worse.