Telecoms push European shares higher on M&A

                                
 * FTSEurofirst 300 index gains 1.5 percent
                                
 * Deutsche Telekom jumps on U.S. unit sale
                                
 * For up-to-the minute market news, click on [STXNEWS/EU]
                                
 
                                
 By Joanne Frearson
                                
 LONDON, March 21 (Reuters) - European shares gained on
Monday after investor confidence rose on signs the situation at
Japan's nuclear plant was improving, with telecoms lifted by
Deutsche Telekom's <DTEGn.DE> sale of T-Mobile USA to AT&T.
                                
 Gains could come under pressure, however, with Brent crude
<LCOc1> rising more than 2 percent after Western warplanes
bombed Libya, prompting renewed worries about the impact of
higher inflation on the global economy. [ID:nLDE72J0RL]
                                
 By 0919 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top shares was up 1.5 percent at 1,104.73 points after
edging higher on Friday.
                                
 "The market hates uncertainty and the issues in Japan are
easing which is helping," Colin McLean, managing director at
fund group SVM Asset Management in Edinburgh, which has 700
million euros ($992.5 million) assets under management.
                                
 Investor sentiment improved on signs that progress was being
made to Japan's stricken nuclear power plant, with engineers
restoring electricity to three reactors. [ID:nL3E7EK08V]
                                
 Telecoms featured among the best performers, with STOXX
Europe 600 Telecommunications <.SXKP> up 3.7 percent. Deutsche
Telekom AG's <DTEGn.DE> jumped 16 percent after AT&T Inc <T.N>
said it planned to buy its T-Mobile USA business.
[ID:nN20237333]
                                
 "The major deal for Deutsche Telekom is also good for
Vodafone as it shows the U.S. is positive on the cellphone
industry," said McLean.
                                
 Vodafone rose 5.2 percent, with Bank of America Merrill
Lynch saying the company should now benefit from lower U.S.
competition levels.
                                
 Brokers saw it as a buying opportunity for telecoms.
Deutsche Bank ranked Vodafone as a "buy", while UniCredit
upgraded Deutsche Telekom to "buy" from "hold" on the sale.
                                
 
                                
 CARMAKERS GAIN
                                
 Elsewhere, carmakers were in demand as JPMorgan Cazenove
said there was value in the auto sector, which it said had a
relative competitive position.
                                
 The STOXX Europe 600 Automobiles & Parts <.SXAP> was up 1.9
percent. Volkswagen <VOWG_p.DE> gained 1.3 percent as German
truck maker MAN <MANG.DE>, which the car maker is the largest
shareholder of hiked its dividend above forecasts.
[ID:nLDE72K051]
                                
 MAN gained 2.7 percent.
                                
 Looking at the technical picture, analysts suggested
critical support was at 1,066, while short-term resistance was
at 1,107 or so. 
                                
 "The index has dropped through its two-year uptrend for the
first time. The good news is that it found support in the form
of the intermediate lows from November and it remains to be seen
whether this will outweigh the breach of the uptrend," said Bill
McNamara, technical analyst at Charles Stanley.
                                
 Traders were still nervous with tensions surrounding the
Middle East and the situation in Libya.
                                
 "On Libya, risks remain high and I think the market will be
volatile until a solution is found," a Milan-based trader said.
                                
 Across Europe, the FTSE 100 <.FTSE> index was up 1 percent,
Germany's DAX <.GDAXI> rose 2.1 percent and France's CAC 40
<.FCHI> was 1.7 percent higher.
 ($1=.7053 Euro)
 (additional reporting by Blaise Robinson; Editing by Hans
Peters)