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Bourses lack belief
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March 30, 1999: 12:07 p.m. ET
London posts small gain; others fall; focus on Kosovo and U.S. interest rates
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LONDON (CNNfn) - London was the only bourse in Europe to keep its head above water Tuesday as initial euphoria following the Dow Jones industrial average's close above 10,000 quickly faded. Investors were preoccupied with the future of U.S. interest rates and fears of a prolonged conflict in Kosovo.
The U.S. Federal Reserve's interest rate policy committee meets later Tuesday, and while it is not expected to change interest rates it may give some indication about their future direction.
At the same time, equity markets, especially in Germany, are starting to get the jitters from the prospects of a prolonged military campaign in Kosovo and Serbia. "What with the air strike on Yugoslavia looking as if it could settle into a longer-than-expected offensive, people are just not prepared to get ahead of themselves," a Munich-based trader told Reuters.
German stocks also weren't helped by a downgrade of the country's economic-growth forecasts. The electronically-traded Xetra Dax closed 26 points lower at 4,841.20, a drop of just over 0.5 percent.
Speculative buying of pharmaceutical stocks helped keep London in the black. The FTSE 100 closed just 11 points higher at 6,264.1, a rise of 0.18 percent.
In Paris, the CAC 40 lost 0.28 percent to close down at 4,141.98, while Zurich's SMI fell 62 points, or 0.88 percent, to 7,024.1.
Further buying of drug companies in London on speculation of further consolidation helped lift SmithKline Beecham (SB) and Zeneca (ZEN). SmithKline closed 4.27 percent higher at 887 pence, while Zeneca put on a 3.88 percent rise to close at 2,910.
British American Tobacco (BATS) was another big gainer in the FTSE 100, up 4.64 percent at 562 pence, after broker Dresdner Kleinwort Benson issued a "buy" note.
British Telecommunications (BT.A) slipped 1.78 percent to 997, after its alliance with AT&T received European regulatory approval.
In Frankfurt, BMW (FBMW) lost 18 euros to 513.50 after a strong rally Monday, as the group said it aimed to repeat last year's earnings despite deliveries in the first three months falling by 15,000 units. The German luxury-car maker also called for a resolution to the talks with the British government over its troubled Rover subsidiary.
In Paris, Accor (PAC) was up 0.13 percent at 235 euros ahead of its results due out after the close Tuesday. The hotel group enjoyed a strong run in the previous session.
More interest in the French banking sector as the dual bid by Banque National de Paris (PBNP) for Paribas (PPM) and Société Générale (PGLE) cleared the last of three regulatory hurdles Monday. BNP's shares put on 1.15 euros to 78.65, SocGen added almost 4 percent to 173 euros and Paribas added 2.20 euros to 103.20.
One of Europe's fiercest takeover battles heated up Monday night after Olivetti raised its bid for Telecom Italia by 15 percent. But investor reaction was muted, Telecom Italia closed up 0.19 euros at 9.87, while Olivetti was flat at 2.88 euros.
--from staff and wire reports
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