Europe ends losing streak

LONDON, England (CNN) -- European markets ended mostly higher on Thursday as robust results and re-energised telecoms and insurance sectors helped to continue a rally that began on Wall Street in the previous session.

But as European investors jumped back into the market -- breaking a four-day losing streak -- many in the United States just as quickly retreated after news of yet another company under investigation for its book keeping.

AOL Time Warner (AOL), the parent company of CNN, late on Wednesday confirmed the U.S. Securities and Exchange Commission had opened a fact-finding inquiry into its accounting practices. The company also posted flat results, which knocked its shares lower. (Full Story)

European bourses, which reaped some of the benefits of Wall Street's surprise comeback late on Wednesday, soared higher at the start of trading on Thursday and -- except for the German market -- managed to hold onto the gains.

London's FTSE 100 rose 5 percent, or 188.8 points, to 3,965.9 and the CAC 40 blue chip index in Paris gained 4.2 percent, or 126.03 points, to 3,149.72.

Frankfurt's electronically traded Xetra Dax was down 0.6 percent, or 20.16 points, to 3,612.50 in late trading (the market was set to close at 1800 GMT). Sentiment soured after Germany's closely watched Ifo survey of business leaders showed they were losing faith that Germany's economy can continue to recover. (Full story)

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 4.1 percent, with insurance and telecoms stocks among the top gainers.

Spain's Telefonica soared 14.2 percent to 9.50 euros after it said it was backing out of its third-generation (3G) operations in Germany, Italy, Switzerland and Austria at a cost of 4.9 billion euros. The decision removed concerns about its cost of continued investment in loss-making high-speed mobile-phone operations. (Full story)

The parent companies of Telefonica's rivals -- Dutch telecom KPN, British mobile phone operator mm02 (OOM) and MobilCom -- were all higher on Thursday.

France Telecom (PFTE), Europe's second-largest phone operator and a partner of MobilCom in its German operation, rose 6.1 percent to 13.80 euros. On Thursday, it said sales rose 10 percent in the first-half of the year and sold its broadcast unit Telediffusion de France (TDF) for 1.6 billion euros to trim its debt.

Its mobile phone unit Orange (PORA), which also reported improved sales, was up 4.4 percent to 5 euros (Full story)

Vodafone (VOD), the world's biggest mobile phone operator, is also active in the German market. It gained 8.4 percent to 84.19 pence.

Deutsche Telekom (FDTE), Europe's largest telecoms operator, was also higher despite the negative sentiment in the German market following the Ifo business confidence numbers. Its shares were up 1.5 percent to 12.18 euros in late Frankfurt trading.

However, BT Group (BT) fell 5.7 percent to 199 pence after it said pre-tax profit before exceptionals rose to £322 million ($506 million) in the quarter ended in June, on turnover of £4.587 billion. The profit figure was ahead of some analysts' forecasts, but turnover fell short. (Full story)

France's Alcatel (PCGE), the world's fifth biggest telecom equipment maker, fell 3.9 percent to 5.41 euros. On Tuesday, it posted a second-quarter net loss of 1.43 billion euros as telecom companies rein in spending. (Full story)

"We know the demand side is weak," a London-based telecoms analysts told Reuters. "But we are seeing changes on the supply side -- management changes, changes of strategy, changes of business plans, the mothballing of sub-scale businesses."

Cap Gemini Ernst & Young (PCAP), Europe's largest computer services company, up2.8 percent to 31.51 euros. On Thursday its operating income slumped in the first half of 2002, but cheered investors by predicting margins would improve from the second half. (Full story)

Insurers rebounded on Thursday, after being battered during the last four sessions due to their exposure to falling stock markets and worries about insolvency. France's Axa (PCS) jumped 11.1 percent to 11 euros, Aviva (AV) soared 11.3 percent to 388 pence and Zurich Financial gained 9.4 percent to 136.75 Swiss francs and.

British drugmaker AstraZeneca (AZN) rose 4.7 percent to 1,990 pence after it posted strong second-quarter earnings, helped by a delay in the arrival of generic versions of ulcer pill Losec in the U.S., and said it planned to meet U.S. regulators shortly to discuss the approval process for cholesterol drug Crestor, its biggest new drug. (Full story)

Diageo (DGE), the world's biggest drinks group, gained 8.7 percent to 740 pence after it agreed to sell its fast-food business Burger King to a consortium for $2.26 billion. (Full story)

The AEX index in Amsterdam rose 5.5 percent and Milan's MIB30 index gained 1.3 percent, while the SMI in Zurich added 6.5 percent.

In the U.S. on Thursday, strength in financial services stocks helped the Dow Jones industrial average recover from early losses and follow through on the previous session's strong rally. (Full story)

Banking giants J.P. Morgan Chase (JPM) and Citigroup (C) were higher after being battered early in the week on allegations that the companies helped bankrupt energy trader Enron to hide its true financial condition. Both banks said they have done nothing wrong.

But the Nasdaq was led lower by AOL Time Warner (AOL) after Salomon Smith Barney and other brokerages downgraded the stock following news of accounting probe and the release of its results late on Wednesday.

In early trading, the Dow Jones industrial average rose 45.55 points to 8,236.84, while the Nasdaq composite fell 10.18 points to 1,280.05. The Standard & Poor's 500 index added 5.81 to 849.24.