* Alcatel stock has tripled in past seven months
* Firm ranks 30th among French companies for free float size
* Buying pressure seen at 255 mln euros -Exane BNP Paribas
* Alcatel would replace STMicro in benchmark
By Blaise Robinson and Alexandre Boksenbaum-Granier
PARIS, Nov 28 Alcatel-Lucent could
rejoin France's blue-chip CAC 40 index next month as the
telecom gear maker's turnaround gains traction and its stock
hits two-year highs, analysts and fund managers said.
If restored to the CAC 40, Alcatel would benefit from demand
from index trackers of about 255 million euros, or 81 million
shares, equivalent to two average days of volume, Exane BNP
Paribas index analyst Christophe Wakim said.
Alcatel - a founding member of the CAC 40 when the benchmark
was created a quarter century ago - was kicked out of the index
a year ago. It is expected to replace chipmaker
STMicroelectronics, whose shares have lost 24 percent
over the past six months as the company grapples with weakening
demand from Asian smartphone and electronics makers.
Alcatel, which makes equipment for big telecom groups like
AT&T and Orange, had been stuck for years in a
downsizing spiral as it struggled with stiff competition from
low-cost Chinese rivals and weak demand from customers.
As a result, its shares plummeted to a record low of 0.67
euros in October 2012.
But the arrival this year of a new chief executive and an
aggressive turnaround plan - which included 10,000 job cuts, 1
billion euros ($1.36 billion) of cost savings and 1 billion
euros of asset sales - has sparked recovery hopes for the
company, with its shares tripling since early May.
"Rejoining the CAC would give back visibility to the group
and would give credence to the company's turnaround strategy,"
said Frédéric Rozier, management advisor at Meeschaert Gestion
Privée, in Paris.
The NYSE-Euronext indexes committee that manages the CAC 40
gathers every quarter and, although the exact dates are not
publicly disclosed, is expected to meet next week. The two
official criteria for inclusion are the free-float adjusted
market capitalisation and a stock's trading volume.
A Paris-based spokeswoman for Euronext declined to comment.
"Alcatel-Lucent is the best candidate for CAC 40 inclusion.
It's ahead of Dassault Systèmes, SES,
Sodexo and Valeo," Exane's Wakim said.
Alcatel's free-float stands at 8.2 billion euros, including
the capital increase set to be completed on Nov. 29, which
places the group at the 30th position among French-listed
companies, according to Thomson Reuters data.
Dassault, SES, Sodexo and Valeo have free-floats of between
5.5 billion euros and 7.3 billion euros.
Shares listed in benchmark indexes such as the CAC 40
usually see strong demand from brokers offering index-tracking
products and from funds benchmarked to the index, meaning that
Alcatel's reintegration in the index could boost the stock.
(Reporting by Blaise Robinson)