* FTSEurofirst 300 closes up 0.3 pct at 1,361.54 points
* Euro STOXX 50 rises 0.3 pct to 3,172.72 points
* French telecom stocks boosted by merger moves
* Take more defensive approach - Sunrise Brokers strategist
By Sudip Kar-Gupta
LONDON, May 16 Corporate takeover activity
propped up European equities on Friday, allowing key indexes to
recover after a sell-off in the previous session caused by weak
economic data in Portugal and Italy.
The pan-European FTSEurofirst 300 index closed up
0.3 percent at 1,361.54 points, recovering from a 0.8 percent
retreat on Thursday that had pushed the FTSEurofirst down from a
6-year peak of 1,372.81 points reached earlier this week.
The euro zone's blue-chip Euro STOXX 50 index
also rose 0.3 percent, to 3,172.72 points.
Takeover activity has supported European equities this year,
and shares in French telecom firms such as Iliad and
those of conglomerate Bouygues - which owns Bouygues
Telecom - rose on Friday on new signs of deals in the sector.
Andreas Clenow, hedge fund trader and principal at ACIES
Asset Management, said he believed that the broader, upwards
trajectory for European stock markets - which has seen the
FTSEurofirst rise 3.4 since the start of 2014 - was intact.
Clenow said the sell-off on Thursday, driven by news that
the Portuguese and Italian economies had contracted in the first
quarter, was not enough for him to reverse "long" positions
betting on more gradual gains for European equities.
"So far, I don't see enough damage to the uptrend," he said.
TIME TO GO DEFENSIVE?
Italy's FTSE MIB equity index, which slumped 3.6
percent on Thursday, recovered slightly to end 1.1 percent
higher, while Lisbon's PSI-20 index edged up 0.1
percent after it had fallen 2.7 percent on the previous day.
HED Capital head Richard Edwards said the weak economic data
out this week from Portugal and Italy showed how the euro zone
remained beset with problems.
"We think there is always another euro zone crisis just
around the corner," he said.
Sunrise Brokers equity strategist Christopher Mellor backed
a more defensive approach to the equity markets and favoured
utility stocks - often preferred for their solid dividend yields
- to protect returns in case of any more prolonged stock market
declines or volatility.
"We are advocating a more defensive bias," he said.
(Additional reporting by Lionel Laurent; Editing by Pravin