European stocks rise as oil offsets telecom slide

European shares nudged higher yesterday as rallying oil and mining stocks offset a sharp slide in telecoms sparked by France Telecom's shock sales warning.

"It's quite clear telecoms is a difficult sector. The whole sector is looking very cheap right now but it's not without reason," said Mark Sheikh, analyst at KBC Asset Management.

"We know where top line is going and the key is to get the cost base down as well which they're not entirely able to do."

The pan-European FTSEurofirst 300 index unofficially closed up 0.3 per cent at 1,311.62 points in above average volume, after earlier touching a fresh four-and-a-half year high at 1,312.99 points.

The narrower DJ Euro Stoxx 50 ended flat at 3,668.57 points, while across Europe Germany's DAX closed 0.2 per cent higher and France's CAC ended unchanged.

The UK's FTSE 100 ended up 0.1 per cent after the Bank of England kept interest rates at 4.5 per cent for a fifth month running.

On the agenda for today are quarterly sales from Suedzucker and the US December producer price index.

France Telecom pulled the European telecoms sector sharply lower as it fell eight per cent to €19.94 after it forecast lower-than-expected like-for-like revenue growth of two per cent for this year.

"The sentiment for the whole telecoms sector has now cooled down," said Markus Steinbeis, a senior fund manager at Activest.