February 3, 2010 / 10:32 AM / 10 years ago

STOCKS NEWS EUROPE-Telecom Italia down; capital hike talk

Shares in Telecom Italia (TLIT.MI) are the leading Italian blue chip .FTMIB losers, down 3.2 percent and reversing half of gains made on Tuesday, depressed by talk in the Corriere della Sera daily newspaper of a 10-12 billion euro ($13.9-16.7 billion) capital increase planned by the firm.

On Tuesday, Telecom Italia shares rose 6 percent after la Repubblica said the government was ready to clear a possible merger with Spanish peer Telefonica (TEF.MC). The government said it was opposed to any takeover. [ID:nLDE6110FV]

“There are articles on a possible capital increase. On the one hand there is the speculative appeal with Telefonica. On the other hand, the possible jumbo capital increase. Today, it is not the speculative appeal,” a broker says.

Telecom Italia says it has no comment to make on the press report.

Several brokers say they expect a merger with Telefonica to be realised, but possibly only after Italian regional elections in March. One broker says such a merger is “a very political decision”.

Brokers say they see news coming out of a meeting on Thursday between Italy’s industry minister Claudio Scajola and Telecom Italia’s chief executive Franco Bernabe.

Reuters Messaging rm://nigel.tutt.com@reuters.net ($1=.7188 Euro)

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