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German DAX edges lower, Telekom up on rumours

FRANKFURT: Germany's benchmark DAX share index on Friday retreated from the previous day's closing record high as uncertainty about U.S. interest rates ahead of key jobs data across the Atlantic weighed on the market.

The DAX index was down 0.33 percent at 7,919.44 points by 1120 GMT with 19 shares falling and 11 rising. Gains by Deutsche Telekom AG, the most heavily weighted stock on the index, limited the market's decline.

"Telekom shares accounts for almost a quarter of the DAX's weighting at the moment and they are moving the index of their own accord," one dealer said.

Deutsche Telekom shares rose as much as four percent in early Friday trade and broke above 100 euros on speculation the group is in merger talks with Qwest Communications International Inc. of the United States.

Its shares later surrendered some gains but remained 1.95 percent stronger at 101.32 euros in midsession trade.

Bid speculation linking Telekom to U.S. carrier Qwest pushed the German group's shares eight percent higher on Thursday.

Bermuda-based Global Crossing, Britain's Cable and Wireless, France's Bouygues Telecom and Spain's Telefonica have been seen as other potential takeover targets.

"Global Crossing is the new name in the market today. Qwest is still being talked about," one trader said.

Analysts said Telekom is under pressure to strike a major cross-border deal before it loses the protection of state control in June, when the German government plans to sell its controlling stake.

Traders said a rise in the number of customers at T-Online, Telekom's Internet unit, due to be floated in April, was also positive for the stock. Telekom said on Thursday the number of T-Online customers had risen to some five million from 4.2 million at the end of 1999.

Traders on Friday also said the market would keep a close eye on U.S. jobs data due at 1330 GMT for signs that expansion in the world's largest economy could put pressure on the Federal Reserve to raise interest rates.

"If the numbers are good then the DAX could turn positive," one trader said.

Shares in German technology group Epcos AG also bucked the negative trend, gaining seven percent to 159.70 euros.

Germany's ZVEI electronics industry association said on Wednesday that sales in the sector rose 8.1 percent to 273.6 billion marks last year as markets recovered from 1998's economic turbulence.

Sportwear and leisure group Adidas-Salomon AG was among leading decliners. Its shares weakened by 5.1 percent to 56 euros in profit taking after rallying more than seven percent on Thursday.

The group said on Thursday it expected restructuring to help profits grow faster than sales from 2001.

Car maker BMW AG was also a leading decliner with its shares down 3.35 percent at 26 euros. The company said this week that future investment at its UK Rover subsidiary would be jeopardised by the strengthening of the pound.

The technology rich Neuer Markt index edged up 0.45 percent to 7,909.63.

Online consultancy and Web design company Pixelpark AG, which fell 0.75 percent to 181 euros, said earlier it planned to expand into northern Europe and become the clear European leader in its field.-Reuters