* FTSEurofirst 300 rises 0.8 percent
* Telecoms up, Telefonica rises on M&A talk
* Saipem slumps 22 pct after profit warning
By Atul Prakash
LONDON, June 17 European equities advanced on
Monday, led by telecom shares after the sector was buoyed by
fresh merger and acquisition talk, although investors stayed
cautious ahead of this week's meeting of the Federal Reserve.
The telecoms sector rose 1.6 percent, helped by a
2.7 percent rise in Spanish telecoms company Telefonica
after a report in newspaper El Mundo that the government had
blocked a 70 billion euro ($93.4 billion) tender offer from AT&T
for the company.
Telefonica denied it had received any approach from the U.S.
company, but investors remained positive on the sector, which
has seen a pick up in merger talks.
British telecoms group Vodafone, which has shown
interest in cable operator Kabel Deutschland and
witnessed speculation U.S. peer Verizon may look to buy
full control of their Verizon Wireless venture, rose 1.3
Clarinvest fund manager Ion-Marc Valahu was uncertain over
whether AT&T would bid for Telefonica, but welcomed the boost to
the stock from the merger speculation.
"I own Telefonica for other reasons, namely the fact that it
generates 80 percent of its revenues outside Spain, in Latin
America. It's a good play on Latin America," he said.
At 0826 GMT, the FTSEurofirst 300 index of top
European shares was up 0.8 percent at 1,185.16 points after
rising 0.2 percent in the previous session.
However, investors stayed cautious ahead of U.S. Federal
Reserve Chairman Ben Bernanke's comments at its June 18-19
policy meeting. A stocks rally has lost momentum after his
recent comment that the Fed could begin trimming its stimulus in
the next few policy meetings if the economy improves.
Christian Stocker, equity strategist at UniCredit, said
stocks could gain in the short term if Bernanke eases worries of
an early tapering.
"But these concerns will resurface soon as U.S. monetary
easing could be scaled down in the second half," he said. "We
have a risk that the market could fall 3 to 5 percent in the
Oil and gas shares, up 0.3 percent, underperformed
the wider market. Oil services companies were under pressure
following a 22 percent drop in Saipem after the
company issued its second profit warning in less than six months
late on Friday. ENI fell 3.1 percent and Petrofac was
down 3.5 percent.
Saipem, in which Italian oil major Eni has a 43
percent stake, slashed its 2013 guidance to a net loss of
300-350 million euros from a previous estimate of net income of
450 million euros.
"There is no investment case: We believe Saipem will be
uninvestible until major unknowns are clarified ... we expect
the shares will remain dead money and will underperform the
sector," Credit Suisse said in a note.