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London - A 40% surge in Nokia on Tuesday boosted technology shares and helped European equities to set a one-week high after Microsoft said it would buy the Finnish company's phone business.
Nokia added the most points to the FTSEurofirst 300 index and helped the STOXX Europe 600 Technology index to rise 3% and lead all other sectors after the € 5.44bn deal for Nokia's phone business and license patents.
The scale of the move higher was fuelled by the large number of investors who had borrowed Nokia stock to sell on in the hope of further price falls, but who had then been forced to buy back after the announcement to limit their losses.
Data from Markit showed that of the shares made available to be borrowed, 66% were out on loan.
The move marks the exit of the 150-year-old company from the global cellphone market it once dominated.
The news followed Verizon Communications' move on Monday to pay $130bn to buy Vodafone out of its US wireless business, highlighting fresh appetite for mega merger and acquisition (M&A) deals on the back of improving global economic outlook.
Gains
"We are in an environment of growing merger fantasy for sure as economic conditions are improving, companies are cash rich and interest rates are very low.
"I see more mega deals taking place in the fourth quarter," Christian Stocker, equity strategist at UniCredit in Munich, said.
"The overall market is in a consolidation phase after yesterday's (on Monday) strong gains.
"We see a positive mood in the market in the very short term, but geopolitical concerns related to Syria are forcing investors to trade cautiously."
