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Wall St. boosts bourses
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May 20, 1999: 1:03 p.m. ET
London rallies 100 points as benign Greenspan testimony bolsters Dow
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LONDON (CNNfn) - London made solid gains Thursday as the market put a positive spin on the latest signals for domestic and U.S. interest rates. Other bourses, subdued amid downbeat euro-zone economic data, ended the session on a positive note as Wall Street got a lift from the testimony of U.S. Federal Reserve Chairman Alan Greenspan to Congress.
It was more the lack of a mention of the U.S. markets in Greenspan's testimony that pleased Wall Street. After an uncertain start, the Dow Jones industrial average was up around 58 points at 10,945.20 as most of Europe's bourses closed.
The Dow's mini-rally helped lift Europe's continental bourses, which spent a volatile session fretting over data and analysis that gave little hope of an economic upturn in Germany, Europe's largest economy.
In London, the FTSE 100 ended up 101 points at 6,368.2, a rise of 1.62 percent as retail figures raised hopes of an interest rate cut. Investors also took heart from the fact that Greenspan did not mention U.S. interest rates in his testimony before Congress.
In Frankfurt, the Xetra Dax pushed higher in late trading to end up 30 points at 5,243.21, a rise of 0.57 percent.
The session was overshadowed by the release of the influential Ifo business confidence survey for April, which showed corporate Germany was less optimistic than a month earlier. The Bundesbank's monthly report further dampened sentiment when it said the German economy lacked dynamism.
France's CAC 40 recovered from a dip into the red as the Dow opened to end up 38 points at 4,413.44, a rise of 0.86 percent. Investors' confidence was dented earlier in the session by data showing that the country's trade balance deteriorated in April.
In Zurich the SMI managed gains of more than 1 percent to end at 7,109.8, a rise of 75 points.
Earlier in the session, the ECB surprised no one when it left interest rates unchanged. Economists said it showed the central bank was still upbeat about the prospects for an economic upturn in the euro-zone.
In London, banking group Barclays (BARC) was one of the star performers, after it announced plans to cut 6,000 jobs -- almost 10 percent of its workforce -- to generate annual cost savings of 200 million pounds. The stock jumped almost 4 percent.
Computer services company Misys (MSY) stole the limelight, however, its stock soaring to close 15 percent higher at 510 pence as the group confirmed it was linking up with online medical firm Healtheon (HLTH) to provide Internet services to the U.S. health-care industry.
British Telecommunications (BT.A) continued rallying after Wednesday's strong results, boosted by Morgan Stanley analysts raising their share price target for the stock to 1,300 pence. BT shares ended up 3.83 percent at 1,134 pence and inspired another rally across the telecom sector.
Among the biggest gainers was Colt Telecom (CTM), which ended up more than 8 percent higher.
Investors reacted to a 10 percent slip in net profit at brewer Bass (BASS) to 276 million pounds ($445 million), by piling into the stock. The shares ended up 4.5 percent.
British Airways (BAY) recovered most of its earlier losses but still ended more than 1 percent down as investors began to focus on next Tuesday's full year results, which are expected to be disappointing.
A large proportion of the FTSE's gains was due to strong buying of the index's two pharmaceutical heavyweights. Glaxo Wellcome (GLXO) and SmithKline Beecham (SB) were both up more than 4 percent. The two drug makers have attracted strong buying in recent sessions as the pharmaceutical sector returned to favor.
Two other European drug makers are certainly out of favor with U.S. regulators, after it was announced in Washington that the Switzerland's Roche and Germany's BASF (FBAS) would have to pay fines of $725 million to settle criminal charges for fixing the prices of vitamins worldwide.
Both stocks finished higher Thursday in anticipation of a settlement, but the announcement came after the Swiss and German markets closed.
In Frankfurt, shares in telecom group Mannesman (FMMN) ended up almost 3.5 percent after the group announced a 5 percent rise in first quarter revenue to 4.6 billion euros ($4.9 billion) and a healthy outlook for the full year.
One stock that attracted the wrath of investors was sports goods maker Adidas Salomon (FADS) after the company gave a profit warning. The stock slumped almost 9 percent.
Shares in Deutsche Telekom (FDTE) put on almost 5 percent, after privately held German media giant Bertelsmann confirmed it had linked up with Microsoft (MSFT) to bid for part of the carrier's cable television network.
In Milan, the stocks of Telecom Italia and Olivetti both closed 2 percent lower as the war of words between the two intensified ahead of the $65 billion hostile bid expiring Friday. Italia chief executive Franco Bernabe told CNNfn he was "confident Olivetti would not win."
In Madrid, Spanish oil giant Repsol shed almost 2.3 percent after its offer for YPF came under threat from new legislation passed by the Argentine parliament.
-- from staff and wire reports
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