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Bourses smile at Dow
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May 6, 1999: 5:24 a.m. ET
Subdued U.S. inflation outlook, Tokyo surge drive European stocks higher
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LONDON (CNNfn) - Cheered by a subdued inflation outlook in the U.S. economy that fueled a comeback rally on Wall Street overnight, London traders drove blue chips more than 1 percent higher Thursday. The upswing helped the leading U.K. index recoup some of the heavy losses incurred in Wednesday's steep slide.
After spurting half a percent at the open, the FTSE 100 continued to claw its way up Thursday, rising 65 points to 6,467. Despite the gains, the index still stood nearly 200 points below its record intraday high hit Tuesday. A mix of positive corporate news and surging stocks overnight in Tokyo fed the early optimism.
The Bank of England's Monetary Policy Committee is expected to leave interest rates unchanged after concluding its latest 2-day meeting Thursday. The European Central Bank in Frankfurt is expected to follow suit after the markets close Thursday.
In Frankfurt the Xetra Dax pared some of its early gains but remained up 1.28 percent at 5,362.89, while the SMI in Zurich climbed 0.75 percent to 7,338.7 amid what traders termed a technical bounce in the wake of prior-session losses.
France's CAC 40 index in Paris sprinted ahead 1.18 percent to 4,419.83, buoyed by strength in bank stocks.
European markets should benefit from the late rally on Wall Street which saw the Dow Jones industrial average climb 69.30 points to 10,955.41.
The Nasdaq Composite also recovered from a morning dive to rally almost 2 percent to 2,543.37. The S&P 500 index climbed 1.1 percent to 1,347.31.
Early indications are for a flat opening in U.S. markets. The index for S&P 500 futures contracts trading on the Globex trading system was down 2 points at 1,350 in early trade. In London brokers estimated fair value for the S&P futures index to be 1,352.38.
Frankfurt was lifted by a strong showing from the financial sector following better-than-expected results Wednesday by Deutsche Bank (FDBK) and Hypo-Vereinsbank. Deutsche climbed 1.20 euros to 55.55 euros after the New York City Comptroller withdrew objections to the acquisition of Bankers Trust. Dresdner (FDRB) and Commerzbank (FCBK) also posted early gains. Dresdner added 0.50 euros to 39.30, while Commerzbank clipped up 0.20 euros to 30.45.
Building on early gains, electronics giant Siemens (FSIE) was lifted 1.40 euros to 72.50 euros after reports of a possible agreement with Japan's Fujitsu on a new European PC joint venture.
Among auto makers, Volkswagen (FVOW) rose slightly though it's attempts to shrug off last week's disappointing results were hampered by a planned strike by auto workers in Brazil, a key emerging market for the German giant. Volkswagen stock notched up 1.15 euros to 66.20.
In Switzerland, insurance giant Swiss Re gained 18 Swiss francs to 3,380 francs despite a 20 percent fall in first-half profit, blamed on heavy hurricane-related claims. It also announced a $620 million share buyback plan
Swiss holiday giant Kuoni said it planned to stick with its merger deal with the U.K's First Choice (FCD), despite the hostile bid for the U.K. firm by Airtours (AIR). First Choice was unchanged at 192 pence, while Airtours rose 0.45 percent to 445 pence.
In London, Thomson (TRV), the leading U.K. holiday firm, was unchanged despite announcing plans to sell 1 million extra holidays as it seeks to maintain its top spot.
Half-year results from ScottishPower (SPW) indicated a 3 percent rise in per-share earnings for the diversified utility group, which also said its purchase of PacifiCorp (PPW) was on track. ScottishPower was up 3 percent at 558 pence.
In London, number-two British telecom firm Cable & Wireless (CW.) said it would launch a renewed takeover bid for Japan's International Digital Corp. C&W shares slipped fractionally to 845 pence.
Television giant TF1 (PTFI) jumped more than 6 percent in Paris after a ratings upgrade and a 12.6 percent jump in first-quarter revenue.
Shares of Anglo-Norwegian engineering group Kvaerner were off 3.50 euros at 156.00 in Oslo after the company reported a sharp first-quarter loss of 4.86 billion crowns ($630 million), due mainly to heavy restructuring costs. Kvaerner also said it was yet to decide on the logistics of a plan, announced last month, for pulling out of the ship-building business.
Planned merger partners Deutsche Telekom (FDTE) and Telecom Italia said Thursday they would consider floating Deutsche's T-Online Internet service under their tie-up proposal. T-Online had 3 million subscribers at the end of March. Deutsche shares rose 0.50 euros to 37 euros.
-- from staff and wire reports
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