* FTSEurofirst 300 up 0.1 pct, up 1.7 pct on week
* Deutsche Telekom, Bouygues, Iliad up on M&A talk
* More than $312 billion in European M&A year-to-date
* Europe stocks enjoy further inflows from U.S. funds
By Blaise Robinson
PARIS, May 2 European stocks gained on Friday,
fuelled by takeover activity, as M&A speculation spread to the
Deutsche Telekom was the top gainer among
European blue-chips. It rose 1.9 percent on talk Sprint Corp
has approached banks to work out funding for its bid for
T-Mobile US Inc, which is majority-owned by the German
At 1418 GMT, the FTSEurofirst 300 index of top
European shares was up 0.1 percent at 1,355.99 points. The
benchmark index was set to post a weekly gain of 1.7 percent.
"The flurry of recent deals show a swing in sentiment from
company managers. The fact that they are starting to buy means
they have better visibility on the economy," said David
Thebault, head of quantitative sales trading at Global Equities.
"For all the companies sitting on big cash piles, it's much
faster to do acquisitions to boost their market share and
improve revenue than to spend money in capital expenditure. This
could be the beginning of a long wave of M&A, as valuations
French telecoms group Iliad rose by 5.1 percent and
conglomerate Bouygues by 3.9 percent, boosted by the
speculation. JP Morgan Cazenove analysts on Friday raised their
rating on Bouygues to "overweight" from "neutral", factoring in
a 50 percent probability of a combination with Iliad.
The STOXX Europe 600 Telecoms Index was up 1.3
percent, making it the best-performing equity sector in Europe.
Also on the M&A front, AstraZeneca shares rose 0.2
percent. The company rejected Pfizer's new indicative
offer of 50 pounds per share, and some traders said Pfizer might
have to raise its offer again up to the 55 pound level.
"Mid-50s is a level that Astra would be far more comfortable
with," said Dafydd Davies, senior trader at London-based firm
Prime Wealth Group.
AstraZeneca's share price has surged by around 26 percent
since news of Pfizer's interest emerged in late April.
European shares started to rally this week as corporate
deal-making outweighed sluggish company results. After
range-bound trading in the past two months, shares have now
recorded the best start to a year since 2008.
So far this year, M&A activity involving a European target
has grown to more than $312 billion. That is more than double
the value over the same period last year and the highest since
2008, according to Thomson Reuters data.
The week's rally in European stocks was also supported by
brisk investment flows, with fresh money coming in from U.S.
investors in the seven-day period ended April 30, data from
Thomson Reuters Lipper shows. Since the start of the year,
European stocks have seen 16 weeks of net inflows from the
United States and only one week of net outflows.
The FTSEurofirst 300 is up 2.8 percent so far this year,
Italy's FTSE MIB benchmark is up 15.2 percent and
Spain's IBEX is up 5.8 percent. That compares with a 2.2
percent rise on Wall Street's S&P 500 and a 0.1 percent
rise on the MSCI emerging markets index.
European M&A: link.reuters.com/qax88v
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Larry King)