Europe runs out of steam

LONDON, England (CNN) -- European markets ended mixed on Monday, after staging a midday rally, as gains by Vivendi Universal and France Telecom were outweighed by Corporate America's accounting woes.

London's FTSE 100 edged up 0.6 percent to 4,685.8 and the CAC 40 blue chip index in Paris was slightly lower at 3,897.37, after trading was temporarily halted in the morning by a technical problem. Frankfurt's electronically traded Xetra Dax was down 0.5 percent to 4,363.01 in late trading (the German market was set to close at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 0.3 percent, with the media and telecom sectors among the gainers.

Vivendi Universal (PEX), the world's second-biggest media company, jumped by almost 20 percent at one point in the session on reports Chief Executive Jean-Marie Messier had agreed to resign and a replacement -- Jean-Rene Fourtou, vice-president of drugmaker Aventis -- had already been selected by the board. (Full story) Vivendi shares ended up 9.2 percent to 23.90 euros.

"There was always going to be a celebratory bounce after Messier's resignation and Aventis' Fourtou has some experience in merger and disposals," Alia Baig, head of European equities at Axa IM, told Reuters.

"However, I would remain cautious on Vivendi as we can not be sure the account are clean after all those U.S. acquisitions."

Other media stocks ended higher on Monday. Pearson Group (PSON), which publishes the Financial Times, gained 5.7 percent to 689.5 pence after Bank of America raised its rating on the stock to "market performer" from "sell." UK music giant EMI (EMI) rose 6.8 percent to 266 pence and broadcaster Granada (GAA) added 5.8 percent to 118 pence.

France Telecom (PFTE) recouped initial losses and soared 25.3 percent to 11.82 euros after a report that the French government would consider renationalising the telecom operator if the stock price did not improve. The government later denied it planned to renationalise the group. (Full story)

Orange (PORA), France Telecom's mobile phone unit, rose 7.3 percent to 5 euros and Deutsche Telekom (GDTE) was up 7 percent to 10.17 euros in late Frankfurt trading.

Swedish telecom equipment maker Ericsson rose 8.6 percent to 15.10 crowns after a major shareholder said the group should either buy another company in the sector or seek a buyer for itself due to the weak markets, Reuters reported. Nokia, the world's biggest mobile phone maker, fell 2.8 percent to 14.40 euros, after posting earlier gains.

Siemens (FSIE), Germany's biggest engineering and electronics company, was down 0.3 percent to 60.61 euros in late trading. Its chief executive told German newspaper Handelsblatt that he did not expect any significant pickup in telecom infrastructure investment before the end of 2003.

Credit Suisse First Boston cut its target on key European semicondutor stocks after revising its earnings and revenue estimates for 2002 and 2003. Among them, Germany's Infineon (FIFX) was down 41. percent to 15.33 euros in late trading, while Dutch Philips Electronics lost 1.6 percent to 27.81 euros and STMicroelectronics (STM) fell 1.5 percent to 24.87 euros.

In the aerospace sector, the UK's BAE Systems (BA) gained 3.7 percent to 348.48 pence after reports that U.S. defence and auto parts group TRW had agreed to a takeover by BAE rival Northrop Grumman Corp. for up to $7.6 billion. (Full story)

The AEX index in Amsterdam lost 0.2 percent while Milan's MIB30 index was up 0.6 percent and the SMI in Zurich gained 0.9 percent.

In the U.S. on Monday, a government rejection of a schizophrenia drug kept the Nasdaq composite index under pressure in early trading, while the Dow got a boost from an upbeat forecast by 3M Co.

At midday, the Nasdaq composite index was down 16.65 points, or 1.1 percent, to 1,446.56, while the Dow Jones industrial average was up 17.24 points, or 0.2 percent, to 9,260.50.