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Greenspan spooks bourses
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May 7, 1999: 6:23 a.m. ET
European markets head lower as Greenspan warns on inflation
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LONDON (CNNfn) - European markets slid Friday after a nervous start sparked widespread selling. Traders pinned the market's drift firmly on Federal Reserve chief Alan Greenspan's inflation warning and the possibility that the next move in U.S. interest rates is up.
The European Central Bank's decision Thursday to hold interest rates at 2.5 percent also left traders looking for direction as markets awaited U.S. unemployment data.
London's FTSE 100 dipped 57.4 points to 6,349.2, while the Xetra Dax in Frankfurt continued its early slide, shedding 0.7 percent to reach 5,237.60.
The CAC 40 in Paris lost 0.78 percent to hit 4,298.96 and in Zurich the SMI accelerated its slide, falling 37 points to 7,198.2.
Greenspan's comments pulled the Dow Jones industrial average down 8.59 points to 10,946.82. That marked a rebound from sharply lower levels when European markets finished trading Thursday. Asian markets followed Wall Street down overnight.
S&P 500 futures trading on the Globex system indicated a modest to mildly higher open for U.S. stocks later Thursday. London brokers calculated fair value for the futures contract at 1,337.39, and it is currently trading at 1,339.00.
In London, information group Reuters (RTR) made the largest gain, adding 6.37 percent to reach 825 pence. Reuters is a major partner in Tradepoint [LSE:TFNS03], the ailing market information system in which a consortium of U.S. banks agreed to take a stake.
The telecom and cable sector remained active as Telewest (TWT) shed gains made after Microsoft (MSFT) announced plans Thursday to buy a 30 percent stake. Telewest stock shed 2.80 percent to hit 278 pence Friday.
Cable & Wireless (CW.) dipped 1.05 percent to 802.5 pence after Japanese telecom firm IDC gave a cool reception to the U.K. firm's hostile takeover bid.
Banking stocks were also marked down with Royal Bank of Scotland (RBOS) losing 3 percent to 1,356 pence after its latest overtures towards Barclays were rebuffed. Barclays (BARC) fell 2.38 percent to 1,844 pence.
Frankfurt stocks moved broadly down and were unimpressed by the fall in March unemployment to 10.7 percent from 11.1 percent the month before. Economists said the shift was due to seasonal factors.
The main gainer in Frankfurt was utilities group Viag (FVIA) whose shares lifted almost 1 percent after a strong profits performance at its Bayernwerk subsidiary.
Insurance giant Allianz (FALV) shed 1.4 percent to reach 281.90 euros. The group announced it had signed an agreement to buy a controlling stake in Korean insurer First Life.
In Paris, the main movers were hotel group Accor (PAC) which dropped 1.62 percent to 243 euros and bank CCF (PCCF), which gained 1.5 percent to 97.95 euros.
In Zurich, insurance stocks pulled the index down with Swiss Re falling almost 1 percent to 3,260 Swiss francs after being hit by large hurricane-related claims.
-- from staff and wire reports
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