European stocks lost ground Tuesday following five sessions of gains, but Alcatel-Lucent SA shares outperformed, jumping as the French telecommunications-equipment company in talks for a possible buyout by Nokia Corp.
The Stoxx Europe 600 SXXP, -0.32% has been darting between small gains and losses. Most recently, it slipped 0.1% to 413.08 as financial and telecom shares flipped into the red.
However, Alcatel shares ALU, +11.60% topped the pan-European benchmark with an 11% surge after Finland’s Nokia NOK1V, -6.76% NOK, -7.71% confirmed it is in advanced talks to buy its French rival. There are no details about the possible valuation of the deal, which may not go through, the companies said.
Alcatel shares led advancers on France’s CAC 40 PX1, -0.67% but overall, that index was down 0.2% at 5,242.59.
Nokia shares fell 7%, the sharpest decliner on the Stoxx 600.
A tie-up between the two networking and telecoms equipment makers would follow years of speculation about a possible deal. If they merge, it would create a new global networking heavyweight to rival Sweden’s Ericsson ERIC, +0.70% and China’s Huawei Technologies.
European investors last week saw huge M&A deals announced, with British oil giant Royal Dutch Shell PLC RDSB, +1.31% agreeing to take over BG Group PLC BG., +0.59% for £47 billion ($68.7 billion), and Dutch parcel-delivery company TNT Express NV TNTE, -0.01% agreeing to be purchased by FedEx Corp. FDX, +0.04% for about €4.4 billion ($4.64 billion).
Meanwhile, investors are still grappling with what Greece’s debt troubles may mean for the future of the eurozone. The Financial Times on Tuesday reported the country is preparing to default on some of its debt payments. Greek officials have denied the report. Greece’s Athex Composite GD, -1.74% lost 0.8% to 771.09. Trading was closed Monday for the Orthodox Easter holiday.
Germany’s DAX DAX, -0.62% fell 0.6% to 12,266.07, while the U.K.’s FTSE 100 UKX, +0.07% was flat at 7,063, losing its grip on earlier gains. The pound GBPUSD, -0.25% fell to $1.4615 after the release of data showing U.K. consumer prices were flat in March.