* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 flat
* Orange, Bouygues, Iliad drop as merger hopes fade
* Car makers rally after upbeat U.S. car sales
By Blaise Robinson
PARIS, July 2 European shares rose on Wednesday,
tracking a rally on Wall Street, though dashed merger hopes
among French telecoms companies kept a lid on gains.
European auto makers were some of the top gainers, with BMW
up 0.9 percent and Fiat up 2.3 percent. Data
showed U.S. monthly auto sales reached levels not seen since
before the financial crisis that led to the bankruptcy of two
American automakers. Annualized figures were the best in eight
But shares in Orange, Bouygues, Iliad
and Numericable tumbled 3.1-3.8 percent after
Orange said it was dropping the idea of joining in the
consolidation of France's telecoms market.
The stocks had rallied in recent months, boosted by
expectation of a wave of mergers after a heated battle for the
takeover of Vivendi's SFR mobile division, snatched by
"While we all agree that there are further deals to be done
across Europe, Orange doesn't seem to want to play ball, and the
market is voting against that," said Veronika Pechlaner, who
helps manage $13 billion of assets at Ashburton Investments.
Shares of the French telecom-gear maker Alcatel-Lucent
surged 4.5 percent, however. JPMorgan analysts
upgraded their rating on the stock to "overweight" from
At 1046 GMT, the FTSEurofirst 300 index of top
European shares was up 0.3 percent at 1,386.99 points, while the
euro zone's blue-chip Euro STOXX 50 index was flat,
at 3,259.33 points.
The FTSEurofirst 300 has gained 9 percent since mid-March,
lifted by fresh European Central Bank stimulus measures as well
as expectations global growth is picking up.
"There are more signs that things are moving in the right
direction in the developed economies," said Valentijn van
Nieuwenhuijzen, head of multi-asset at ING Investment
Management, which is "overweight" equities and has a positive
bias on European stocks.
On Wall Street on Tuesday, the Dow Jones industrial average
and the S&P 500 closed at record highs, after data
showed manufacturing activity picked up in the United States and
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Sudip Kar-Gupta in London and Alistair
Smout in Edinburgh; Editing by Larry King)