Europe soars on strong U.S. sales

Trader takes orders at the Frankfurt Stock Exchange

LONDON, England (CNN) -- European markets soared to a finish on Tuesday as strong U.S. retail sales figures gave investors renewed hope for an economic recovery.

That optimism helped lift battered tech and telecom stocks, which are usually the first to feel the impact of economic uncertainty and poor corporate profits.

London's FTSE 100 gained 0.7 percent to 5,239.5 and the CAC 40 blue chip index in Paris rose 1.6 percent to 4,447.12, while Frankfurt's electronically traded Xetra Dax was up 1.4 percent to 5,046.14 in late trading (the German market was set to close 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, rose 1.1 percent, with the information technology, computer services, telecom and oil sub-indices leading the gains.

News that U.S. retail sales jumped 1.2 percent in April, the biggest gain in six months, sent Wall Street higher on Tuesday. (full story) The markets were also helped by better than expected earnings from retail giant Wal-Mart and an upgrade of Intel, the world's biggest chipmaker, from a U.S. investment bank.

In Europe, markets received an early lift from Switzerland's biggest bank UBS. Its shares rose 3.1 percent after it said net income dipped 14 percent to 1.363 billion Swiss francs ($852 million) but that was better than analysts' forecasts. The bank also replaced the head of UBS Warburg investment bank unit. (full story)

Another early mover was media giant Vivendi Universal (PEX). Its share ended up 5.2 percent after Italy's antitrust authority gave it the green light to merge its Italian pay-TV unit Telepiu with rival Stream.

It also said it had sold a $2.4 billion stake in Rupert Murdoch's British Sky Broadcasting through a market sale. (full story) BSkyB (BSY) rose 4.1 percent.

Nokia, the world's biggest mobile phone maker, rose 4.6 percent and Swedish rival Ericsson climbed 3.9 percent. Alcatel (PCGE), the world's fifth-largest telecom equipment maker, surged 6 percent in Paris.

Siemens (FSIE), the German electronics and engineering powerhouse, advanced 5.3 percent in late Frankfurt trading.

Vodafone (VOD), Europe's biggest mobile phone company, closed up 5.6 percent and its smaller rival Mmo2 (MOO) jumped 7.9 percent. Deutsche Telecom (FDTE), Europe's biggest phone company by sales, was up 4.1 percent in late trading.

Meanwhile, France Telecom (PFTE) fell 2.3 percent after MobilCom, Germany's fifth-largest mobile phone operator, said its loss widened to 116 million euros ($106 million) in the first three months of 2002 from 43.5 million euros a year ago.

France Telecom, which has a 28.5 percent stake in MobilCom, has been embroiled in a battle with the company over its funding and strategy commitments in Germany. (full story)

Chipmakers, who found strength from U.S. giant Applied Materials when it reported strong results on Monday, got another boost from the Intel upgrade on Tuesday.

Infineon Technologies (FIFX), Europe's second-biggest chipmaker, was up 5.3 percent in late Frankfurt trading, while No.2 Philips Electronics added 5 percent. Applied's rival ASML surged more than 6 percent and Europe's biggest chip designer ARM Holdings (ARM) gained 2 percent.

Fiat, the Italian industrial company, rose 1.6 percent after it posted a loss of more than half a billion euros as its car unit continues to bleed money. The company also said it planned to float its sports and racing car unit Ferrari by the end of the year. (full story)

GlaxoSmithKline (GSK), Europe's biggest drugmaker, slipped 0.4 percent. On Tuesday the company's Chief Financial Officer John Coombe said it was looking at struggling Bristol-Myers Squibb as a possible takeover target. (full story)

In Amsterdam the AEX index rose 1.65 percent and Milan's MIB30 index gained 1.8 percent, while the SMI in Zurich climbed 0.8 percent.