* FTSEurofirst 300 ends up 0.2 pct
* Orange, Bouygues, Iliad drop as telecom merger hopes fade
* Carmakers rally after upbeat U.S. auto sales
By Blaise Robinson
PARIS, July 2 European shares inched up on
Wednesday, adding to the previous day's sharp rally, though
dashed hopes of merger moves among French telecoms companies
kept a lid on gains.
Automakers were among the top gainers, with Daimler
up 0.8 percent and BMW up 0.6 percent.
Data showed U.S. monthly auto sales reached levels not seen
since before the financial crisis, and annualised figures were
the best in eight years.
But shares in Orange, Bouygues, Iliad
and Numericable tumbled 2.0-3.5 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 in French telecom gear maker Alcatel-Lucent
surged 3.7 percent, however. JPMorgan analysts upgraded their
rating on the stock to "overweight" from "neutral".
The FTSEurofirst 300 index of top European shares
ended 0.2 percent higher, at 1,385.09 points, adding to a 0.9
percent rise on Tuesday.
The FTSEurofirst 300 has gained about 9 percent since
mid-March, lifted by fresh European Central Bank stimulus
measures as well as expectations that global growth is picking
"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
Asia. U.S. stocks were up again in early trade on
"The positive trend in U.S. equities is quite impressive,
particularly for the Nasdaq, boosted by all the M&A and IPOs,"
FXCM analyst Vincent Ganne said.
Ahead of Thursday's U.S. non-farm payrolls figures, the ADP
National Employment Report showed on Wednesday U.S. companies
hired 281,000 workers in June, marking the biggest monthly
increase since November 2012 and well above market expectations.
"These ADP figures are usually a good indication for the
payrolls data," Ganne said.
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 Tom Heneghan)