STOCKS NEWS EUROPE-Nokia extends rise on dividend hopes

Shares in Finnish telecoms firm Nokia (Stockholm: NOKI-SEK.ST - news) rise 4.4 percent to 4.89 euros, extending the climb following the last week's deal announcement to 65 percent, as investors eye hefty extra dividends from the to-be-reformed company.

Nokia is selling its phone business and license to its patents to Microsoft (NasdaqGS: MSFT - news) Corp for 5.44 billion euros ($7.2 billion), and would likely pay extra dividend to shareholders.

"There is a revaluation going on for the stock. As the troubled phone business likely disappears, the remaining company is being compared to Ericsson (Xetra: 765913 - news) ," says Sami Sarkamies, senior analyst from Nordea Markets.

He estimates that Nokia, which will be focusing on telecoms gear business, could next spring pay an extra dividend theoretically as big as 1.5 euros per share.

"Depending on the size of the extra dividend, one could see a remarkable discount compared to Ericsson (Stockholm: ERIC-B.ST - news) ."

Nokia's share price has been boosted also because funds that had borrowed Nokia stock to sell on, in a 'short' bet it would fall further, have been closing their positions, Sarkamies adds.

The percentage of Nokia's share out on loan has fallen to 7.2 percent as of Thursday from around 12 percent before the Miscrosoft deal was announced, according to Markit data, suggesting short interest on the stock is now down to levels last seen in early 2012. ($1 = 0.7514 euros)

Reuters messaging rm: jussi.rosendahl.thomsonreuters.com@reuters.net