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Euro lights fire under bourses
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January 4, 1999: 12:44 p.m. ET
Market surge led by telecom and bank stocks, London left behind
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LONDON (CNNfn) - The introduction of Europe's single currency sent bourses sharply higher Monday. Investors reacted gleefully to the launch of the euro, which seemed to go off without a hitch.
Relief among bankers and regulatory authorities was reflected in the surging performance of most European stock markets, although London - not part of European Monetary Union - missed out on the party.
The jolly mood in Europe was boosted by a strong opening on Wall Street.
Some of the "europhoria" affecting bourses could not be readily explained by market professionals, who pointed out that light volumes exacerbated the positive moves.
In London the FTSE 100 was a pale shadow of the continental European markets. London's blue-chip index ended the session at 5,879.4, down just 3 points, despite some good individual performances.
In Frankfurt the mood was completely different, with the Xetra Dax rocketing 284 points to close at 5,290.36 for a rise of almost 6 percent.
The Paris market wasn't far behind, with the CAC 40 jumping more than 5 percent, 205 points, to close at 4,147.50. Even Zurich, not even part of the European Union, joined in. The SMI index soared 4 percent, 281 points, to 7,441.8.
Smaller bourses moved even more sharply, with Italy and Spain both rising by more than 6 percent.
In London, investors digested the possibility of a price war among leading supermarket retailers. ASDA (ASSD), said to have started the price war, firmed 1 percent to 163 pence. The rest of the sector collapsed however, as investors dumped loads of shares. Sainsbury (SBRY), Tesco (TSCO) and Safeway (SFW) all fell more than 7 percent.
Telecom stocks jumped sharply however, as a batch of sales figures for 1998 proved that cellular operators had enjoyed a bumper Christmas. Orange (ORA) soared more than 13 percent to 790 pence, followed by a 7 percent rise at rival Vodafone (VOD).
BP Amoco (BP.) accounted for a large part of the day's volume in the stock's first day of trading after regulators okayed the merger. The shares gained 2 percent to 930 pence.
Chemicals group ICI (ICI) tumbled 7 percent to 498 pence after U.S. regulators blocked the $727 million sale of a subsidiary.
In Frankfurt the fervor for telecom stocks was even stronger than in London. Index heavyweight Deutsche Telekom (FDTE) surged 16 percent to 32.43 euros, with dealers scrabbling to find reasons for the rise. Competitor Mannesmann (FMMW) gained 11 percent to 109.5 euros.
Car makers took off on positive sentiment from the Detroit Motor Show. Volkswagen surged 10 percent to 75.2 euros, and BMW (FBMW) gained 7 percent to 690.5 euros.
Deutsche Bank (FDBK) ran up more than 6 percent to close at 52.99 euros.
Financial stocks led Paris higher, and car maker Renault (PRNO) rose 10 percent to 41.89 euros.
Gains in the Swiss market were led by the banks, with UBS up 17.5 francs at 439.5 francs, and CS Group at 234.5 francs, up 9 percent.
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