Pirelli, the Italian company which owns 80% of Olimpia, announced it was in talks with AT&T and America Movil, who are jointly bidding for a third each of Pirelli controlling stake in TI.

The news excited the rest of the sector, lifting Dutch peer KPN 4.1%. France Telecom climbed 2.8 %, while Britain BT Group added 2.1% and Germany Deutsche Telekom rose 2.7%.

Merger speculation keeps driving shares in DaimlerChrysler as the German carmaker was imminently expected to announce the sale of its US Chrysler unit. Weekend press reports suggested the division may fetch between 6 eurosbillion to 9 billion euros, driving DaimlerChrysler shares 1.4% higher.

Decliners

U.K. mortgage bank Northern Rock lost 0.4% after performing strongly since the middle of March. The company stated that it continues to trade strongly in the first quarter of 2007, putting it on track to meet its asset and profit growth strategy targets. Siemens declined 0.2%, while Nokia dipped 0.9%. Alcatel-Lucent shares were down 0.1% in Paris, while Ericsson shares declined 0.8% in Sweden.

Currrencies

The dollar was down against most other major currencies in European trading Monday. The euro traded at $1.3350, up from $1.3305 late Friday. The British pound traded at $1.9726, up from $1.9593. The dollar fetched 117.78 Japanese yen, down from 118.27.