Europe bounces with Vivendi

Market watchers and traders not convinced by latest rally

LONDON, England (CNN) -- European markets bounced sharply higher in Thursday afternoon trading after media giant Vivendi ousted its chief executive and began moves to shore up its finances.

London's FTSE 100 rose 1.4 percent to 4,452.9, after closing at a 5-year low on Wednesday. Frankfurt's electronically traded Xetra Dax jumped 2 percent to 4,222.65 and the CAC 40 blue chip index in Paris climbed 1.9 percent to 3,692.28.

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 1.9 percent, with the information technology, computers services and media sub-sectors leading gains. The index is down by about 20 percent this year.

But trading is expected to be on the light side as U.S. markets are closed for Independence Day celebrations and many doubted the staying power of the recovery.

"It's way too early to say it's a turn. One would expect some kind of recovery after days of sharps falls, but the newsflow is still desperately poor from the corporate sector,'' Richard Champion, European fund manager at Pavilion Asset Management, told Reuters.

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"There is so much concern about the strength and durability of the economic recovery in the United States. It's a question of confidence and getting translation of economic recovery into corporate figures,'' Champion said.

"We may get a significant bounce, but I would expect some kind of trading range until we get more evidence of improvement.''

Vivendi Universal's (PEX) stock, which has fallen about 80 percent this year, soared 7.4 percent to 14.90, but off earlier highs, after Jean-Rene Fourtou was appointed the new chief executive after a boardroom coup ousted Jean-Marie Messier.

Fourtou warned that the Franco-American conglomerate's cash position was "stretched" and said the company was in talks with banks to secure fresh lending. But analysts said the company would have little problem winning back the support of banks. (Full story)

France Telecom (PFTE) jumped 9.7 percent to 12.31 euros on hopes the French government will eventually step in and back the heavily-indebted company, which is still majority-owned by the state.

British Sky Broadcasting (BSY), the satellite broadcaster owned by Rupert Murdoch's News Corp, rose 2.1 percent to 587.4 pence as it strengthened its position in the UK digital market. Britain's television regulator awarded BSkyB and publicly funded British Broadcasting Corp. the licences to broadcast 24-free-to-air channels and interactive services. (Full story)

The battered telecom sectors rose after strong gains on the tech-laden Nasdaq. Vodafone (VOD), Europe's biggest mobile phone company, which fell to four-and-half-year lows on Wednesday climbed 4.6 percent to 84.4 pence. Deutsche Telekom (FDTE), Europe's biggest phone company, rose 4.8 percent to 9.55 euros.

Finland's Nokia, the world's biggest mobile phone maker, climbed 5.7 percent to 14.54 euros, France's Alcatel (PCGE) climbed 8.6 percent to 6.16 euros, Philips Electronics of the Netherlands advanced 5.4 percent to 25.60 euros.

Sweden's Ericsson, the world's largest mobile phone network supplier, rose 9.5 percent to 16.10 euros on fresh speculation it would sell its stake in the Sony Ericsson mobile phone handset joint venture.

Siemens (FSIE), Germany's biggest electronics and engineering company, rose 3.2 percent after the head of the group's U.S. operations told business daily Handelsblatt the group has seen signs of improvement in the United States.

The AEX index in Amsterdam rose 3.1 percent and Milan's MIB30 index gained 0.7 percent, while the SMI in Zurich added 1.8 percent.

In the U.S. on Wednesday, stock markets eked out gains ahead of the Fourth of July holiday, after two days of punishing losses, but concerns remained about possible terrorism, with investors covering bets late in the day that stocks would fall further.

The Dow Jones industrial average jumped 47.22 points to 9,054.97, up about 0.5 percent and snapping a three-session losing streak. The Nasdaq composite index closed up 22.35 to 1,380.17, up about 1.7 percent. The Standard and Poor's 500 index rose 5.90 to 953.99.