BERLIN: Siemens was planning to announce Tuesday that it intended to eliminate up to 7,000 jobs, or 40 percent of workers, in its troubled business telecommunications unit in Germany and Brazil, as it seeks a buyer for the business, which makes corporate phone networks, a person close to the company said.

Company executives were to disclose plans for the business, which is called Siemens Enterprise Communications, at a meeting with representatives of the workers council in Munich. According to the person, executives will announce plans to cut up to 4,000 jobs within the unit, which employs 17,500, and will advise worker representatives that a further 3,000 jobs could be transferred into ventures with new business partners.

The layoffs will likely occur in Leipzig, Germany, and in Brazil, where Siemens has factories that produce phones and corporate communications networks, the person said. The job reductions and sale of small portions of business are unrelated to the German companys two-year-old effort to sell the entire unit, the person said.

Peter Lцscher, president and chief executive of Siemens, has said he wants to sell or find an investment partner for the entire business by June. Plans for the job reductions were first reported Monday in The Financial Times Deutschland newspaper. A Siemens spokesman, Wolfram Trost, said Monday that the company would not comment on the newspaper report.

Siemens and its workers council representatives met in August to discuss the future of the unit. At that time, Siemens executives said they wanted to eliminate 600 to 650 jobs, said Matthias Jena, a spokesman for IG Metall, an umbrella group representing Siemens unions, in Munich.

“We have not heard anything about 7,000 jobs being cut,” Jena said Monday.

The corporate telecommunications business was first prepared for a potential sale in 2005, as part of a Siemens reorganization of the companys telecommunications businesses. Siemens put the largest part of that business - a unit which sold network equipment to phone operators - last year into Nokia Siemens Networks, a joint venture with Nokia, the market leader in cellphones.

But Siemens has so far been unable to find a buyer for the remainder of the business - which was formerly called Siemens Enterprise Networks, which makes phone systems and phones, like the Siemens Gigaset, for business customers.

Theo Kitz, an analyst at Merck Finck, a private bank in Munich, said plans for significant job cuts would probably help Siemens rid itself of the unprofitable business.

“This would be a way to dress up the bride, so to speak, so they could more easily sell the business,” Kitz said.

But the job cuts could also trigger retaliatory action from unionized workers at Siemens, he added.

Should the cuts be significant, Kitz said workers might vote to go on strike. While that is something they have not done in large numbers during the past decade, German trade unions have become more active within the last two years, Kitz said, with workers at Deutsche Telekom and the Deutsche Bahn recently winning concessions after prolonged strikes.

“That could make job cuts very costly for Siemens,” he said.

LONDON: After years of juicy returns from smaller companies in Europe, investors are regaining their taste for larger-size European stocks.

And 2008 looks set to see strong performance from these stock titans, which, analysts say, are less tainted by the credit crisis, the U.S. housing slump and rating downgrades.

“They tend to operate much better against a backdrop of slower and uncertain growth,” Henk Potts, a strategist for Barclays Wealth, said of the larger stocks.

Last year, as equities catapulted to multiyear highs, analysts cited the more modest valuations and historical underperformance of large caps versus their midsize peers. In the end, it took the crisis in U.S. subprime lending to bring about upward movement in the large caps.

The FTSE 100 index, even with its preponderance of heavyweight banks, has outperformed the FTSE midcap index by 2 percent since July. The story is the same in Germany, where the blue-chip DAX has outperformed the MDAX by about 5 percent.

Quite a contrast with the four years leading up to the peaks of July 2007, during which the FTSE 100 gained about 98 percent and FTSE midcaps surged 225 percent. In that period even the booming 261-percent DAX gain was overshadowed by a 340-percent MDAX rise.

And with the nagging uncertainty that the liquidity squeeze brought with it, the pieces are in place for large-cap performance to continue, Potts said.

“We believe that valuations still look very cheap in terms of large caps, in particular in the U.K., so we would certainly suggest its still a good place to invest your money,” he said.

The FTSE 100 is trading at about 10.9 times the average estimated earnings of its components, while the FTSE midcap is trading at a multiple of 11.6 times.

The DAX is trading at a multiple of 10.7 and the MDAX at 12.4, while in France, the CAC-40 has a multiple of 10.5 and that of the midcap CAC-100 is nearly 13.

Adding to the allure of large caps is the fact that the biggest stars dotting the European equity universe are nearly all so-called defensive stocks - the utilities EDF of France and E.ON of Germany, the telecommunications firm Telefуnica of Spain, the oil major BP and the Swiss groups Nestlй and drugmaker Novartis.

Arthur van Slooten, a strategist with Sociйtй Gйnйrale in Paris, said: “If you think about cyclical exposure, small caps are in a more difficult situation than large caps that have better spread their activities.”

And judging by various volatility indexes - often used to measure investor risk appetite — investors are far more worried about Europe than they are the United States.

The VIX index, which tracks the implied volatilities on Standard Poors 500 options contracts, has risen 8 percent this year, while the VDAX-NEW volatility index for Germany is up nearly 60 percent.

“It has been very important in the first weeks of this year; we all realized that market volatility has strongly increased and in that case, large caps do a better job,” van Slooten said.

Morgan Stanley has also taken a dim view on equities this year and advised its clients to favor cash over equities, but within that asset class, to favor large caps over small to midcaps and to pick defensives over cyclicals.

With nervousness running high and so much doubt over the exposure of the investment banks to the U.S. subprime crisis, most investors have moved their - now sharply reduced - equity exposure to the least risky stocks.

“Because hedge funds invested in midcaps from 2002 to 2006, even mid-2007, it was a great way to juice up your returns,” said Andrew Lynch, who runs a European equity portfolio at Schroders, an asset-management company. “When that rolled over, there were a lot of people scrambling to get out of that position, and I think that trade has still got a long way to go.”

That said, even with the protection afforded to large caps by their sheer bulk, not all large caps are a safe bet.

After all, some of the largest companies are financials, weighted with the subprime stigma, and have been badly hit.

XINYU, China, July 20 (UPI) — China-based LDK Solar Co. Ltd. announced plans to buy polysilicon production equipment from GT Solar Inc.

LDK Solar, a leading manufacturer of multicrystalline solar wafers, announced it has signed a contract to purchase the equipment from GT Solar, a subsidiary of GT Solar International Inc.

Under this contract LDK Solar will purchase polysilicon reactors and other polysilicon production equipment for installation in its manufacturing facilities in Xinyu, enabling the company to produce virgin silicon feedstock for use in its production of multicrystalline solar wafers.

LDK officials expect that following installation of this equipment, the company will have polysilicon production capacity of up to 6,000 metric tons in 2008 and 15,000 metric tons in 2009.

“Through the purchase of this equipment, we are expanding our capabilities in the solar value chain, adding the production of pure polysilicon to our operations,” Xiaofeng Peng, chairman and chief executive officer, said in a company statement. “In combination with our ability to use recyclable polysilicon in our production process, producing our own pure polysilicon feedstock will enhance our cost efficiencies.

“We look forward to working with GT Solar and installing their best-in-class polysilicon production equipment into our manufacturing facilities. Our purchase contract with GT Solar is a key element of our expanding production plans.”