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London breaks new ground
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May 4, 1999: 5:38 a.m. ET
Dow's powerhouse performance drives European markets higher
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LONDON (CNNfn) - London and Paris blue chips powered into new territory Tuesday after the Dow Jones industrial average bulldozed past the 11,000 barrier overnight. Other bourses made positive strides a day after U.S. manufacturing data allayed fears of an imminent hike in interest rates.
The rally was seen as underpinned by a continuing shift out of high-growth stocks into cyclicals.
Fired by Wall Street's 225-point, or 2.09 percent rally, to 11,014.69, the FTSE 100 burst out of the starting blocks Tuesday with an immediate 50-point gain. The benchmark U.K. index then leapt 1.47 percent, or 96 points, to 6,648.4, breaking through its previous intraday peak of 6,635.9, set last week.
The FTSE jump was sparked by Monday's U.S. purchasing managers' report pointing to tame inflation. The NAPM index helped allay fears of a hike in U.S. interest rates, which in turn triggered a run-up in stock valuations on Wall Street.
Early futures trading in Europe indicated that stocks would open in calmer fashion in New York later Tuesday, with the market expected to be flat. S&P futures were trading barely a point higher on the Globex trading system, with an added 1.5 factor for fair value, which takes into account interest and dividend effects on the futures contract.
Germany's electronically-traded Xetra Dax was up 1.25 percent at 5,450.28, a rise of 67 points. But some analysts expect the index to run into technical resistance around the 5,500 level. In Zurich, the SMI advanced 0.61 percent to 7,488.2, a rise of 45 points, with Swisscom among the early leaders.
In Paris, the CAC 40 sprinted nearly three quarters of a percentage point higher, to 4,474.92, extending its run into virgin territory after a second successive record close Monday.
Among the strongest risers in Frankfurt, Europe's largest car maker Volkswagen (FVOW) was up 2.7 percent at 67.30 euros on the back of a report showing a nearly 30 percent jump in U.S. sales of light cars and trucks in April. DaimlerChrysler added 1.10 euros to 94.20, while BMW (FBMW) advanced 1 euro to 679.00.
Shares of SGL Carbon (FSGL) soared 13 percent to 60 euros after the maker of graphite and electrodes said it had settled a U.S. antitrust probe into allegations of price-fixing.
In Zurich, Swisscom rose 6 Swiss francs to 566 francs. The telecom company's stock rose after it reached agreement Tuesday with its unions to cut 4,000 jobs or 18 percent of its workforce.
Among the stocks to watch in London were beverage-to-doughnuts group Allied Domecq (ALLD) and pub operator and brewer Whitbread (WTB). The world's No.2 distiller said Monday that it was talking to Whitbread about selling its pubs division for $3.6 billion.
Allied Domecq shot up 12.3 percent to 545 pence in London, while Whitbread gained 3.55 percent to 1,094 pence.
The long-suffering oil exploration and production sector is expected to receive a boost after the U.K.'s second largest E&P company, Lasmo (LSMR), said it would pay $1 billion, for smaller rival Monument Oil & Gas (MOG).
Lasmo slipped 5.5 percent to 150 pence, as Monument Oil surged 22 percent to 62 pence.
In Amsterdam, KLM is the stock to watch after the airline said it planned to consolidate its share capital and could buy back up to 25 percent of its shares. The stock bounded 8 percent.
In the telecom sector, Deutsche Telekom (FDTE) was up 0.35 euros at 37.75 after the telecom giant expressed confidence that its planned $82 billion merger with Telecom Italia would go through. The statement came amid reports of opposition to the deal from a group of Telecom Italia's institutional shareholders.
-- from staff and wire reports
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