Nokia shares jump, energy companies drive European shares higher

Shares in Nokia jumped yesterday after US chip maker Texas Instruments reported better than expected cellphone chip sales and energy companies gained with the price of crude, pushing European stocks higher.

The pan-European FTSEurofirst 300 index of top shares closed 0.5 per cent higher at 869.56 points after choppy trade between 875.75 and 865.53 earlier in the session.

The index is up around 34 per cent for the year since hitting a lifetime low in early March.

"It is a very quiet day on the market. Maybe this is the tone of what we are going to be in for this summer ... I think the market has come up as far as it is going to for a while ... now I think investors are going to sit on their hands," said Jim Wood-Smith, head of research at Williams de Broe.

Technology stocks added the most points to the index. Nokia gained 3.7 per cent as Texas Instruments raised its targets for second-quarter earnings and revenue, signalling improving demand in the chip market. "The implication is that Nokia, the large global handset market bellwether, is seeing momentum towards volume recovery on its own competitive merits," said CCS Insight analyst John Jackson.

Alcatel-Lucent, Ericsson and Infineon Technology were up 0.7-2.9 per cent.

Energy stocks were also higher as crude rose 1.8 per cent, snapping a two-day slide. BP, Tullow Oil and Total were up 0.3 - 4 per cent.

Across Europe, the FTSE 100 index was down 0.01 per cent, Germany's DAX was down 0.1 per cent and France's CAC 40 was up 0.2 per cent.

Banks were among the biggest movers, although stocks within the sector were mixed. Lloyds Banking Group gained 3.1 per cent after it said it is to close all branches of its Cheltenham & Gloucester unit as part of a shake-up of its mortgage and loans operations that will cut up to 1,660 full-time jobs. Banco Santander, BNP Paribas and Credit Suisse were up 1.1-1.7 per cent.

HSBC lost 1.1 per cent as traders cited concerns that a major stakeholder may need to place shares.

Meanwhile, the US Treasury Department said that 10 of the nation's biggest banks had been cleared to pay back a combined $68 billion of taxpayer money pumped into them last year to combat the credit crisis.

The DJ Banking Eurostoxx banking index is up around 21 per cent for the year following a 64.76 per cent slump the previous year.

On the downside, defensive stocks were out of favour. Food retailer Carrefour was down 3.2 per cent and British American Tobacco was 1.9 lower.

Earlier stocks pared losses after German industrial production fell unexpectedly by 1.9 per cent month-on-month last April, hit by a sharp fall in capital goods output, the Economy Ministry said. German exports resumed their slide in April and imports fell even more sharply, tempering hopes that Europe's largest economy will soon recover from its deepest recession since World War Two. "Everything was struggling to go up today as optimistic talk of recovery in the US this summer was countered by dire export numbers and an unexpected decline in industrial output in Germany suggested that Europe's largest economy is unlikely to recover any time soon," said Mic Mills, senior trader at ETX Capital.