The chairman and chief executive of German phone firm Deutsche Telekom is stepping down.

Ron Sommer, who has led Deutsche Telekom for seven years, announced he was quitting at a press conference held while the firm's supervisory board was in a special meeting.

He said he had lost the confidence of the supervisory board and resignation was the "only responsible step left open" to avoid "any further damage to the company".

Deutsche Telekom's board said shortly afterwards that it had appointed a caretaker chairman for six months and split the job of leading the company in two.

Shares lurch

Speculation that Mr Sommer might be asked to leave has sent the firm's shares, owned by many of Germany's small investors, gyrating in recent weeks.

Investors celebrated his departure, pushing Deutsche Telekom's share price up 6.12% to 10.93 euros at the close.

He will be replaced as chairman by Helmut Sihler, the ex-head of the supervisory board chief, while technology director Gerd Tenzer is to become Mr Sihler's deputy.

Gerd Tenzer was widely tipped to take over

It remains to be seen whether investors will view the joint appointment as an adequate replacement for Mr Sommer, one of Germany's most charismatic business leaders.

Government stake

Investors have blamed Mr Sommer for an expensive acquisition spree and for overspending on third-generation mobile phone licences - moves which saddled the company with big debts and caused its share price to drop sharply.

Mr Sommer is thought to have lost the political backing of the German government, Deutsche Telekom's biggest shareholder, which has a 43% stake.

Deutsche Telekom's falling share price has weighed on Germany's benchmark Dax index, itself suffering from the global market meltdown.

About three million Germans bought shares in the company before they tumbled 90% from their high in March 2000.

Germany's Social Democrats, led by Chancellor Gerhard Schroeder, face a general election in the autumn.

Mr Schroeder has been losing out to the conservative opposition parties in the opinion polls.

But if Deutsche Telekom's choice of replacement fails to find investor approval, the government could face fresh embarrassment.

Conservative politician Edmund Stoiber, on Monday criticised Mr Tenzer, who had been widely tipped to lead the company, as a lacklustre candidate.