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Frankfurt left in red
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May 31, 1999: 12:18 p.m. ET
Paris, Zurich make strong gains, German stocks close down; London closed for holiday
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LONDON (CNNfn) - Frankfurt failed to make it into the black at the close Monday as Europe's other bourses all registered solid gains toward the end of a subdued session due to market holidays in both London and New York.
Frankfurt's electronic Xetra Dax ended just in the red, down 2.39 points, or 0.05 percent, at 5,068.59 as concerns about the outlook for Europe's largest economy continued to muddy the picture.
In Zurich, in contrast, strong buying of banking stocks helped the SMI jump almost 124 points, or 1.82 percent, to end at 6,911.6.
Shares on the CAC 40 in Paris also finished comfortably in the black, up 36 points at 4,351.29, a rise of 0.84 percent.
With Wall Street closed Monday, investors still took their lead from Friday's 93 point rally. The advance followed release of a Chicago-area economic report which hinted at lower inflation, lessening fears of a U.S. interest rate hike.
Modest Monday advances in Tokyo and Hong Kong also helped sentiment, but German investors were more cautious as the chief economist of the European Central Bank warned of trouble ahead for Europe's largest economy unless it underwent some major surgery.
Otmar Issing told a weekly German magazine that further recent weakness of the euro, following Italy's deal to loosen its budget deficit target, should serve as a warning to all euro-zone governments. He singled out Germany's economy for particularly criticism, warning that failure to deregulate and create a more flexible labor market, would leave the country as the "sick man of Europe."
In currency markets, the euro had a relatively quiet session after hitting a record low of $1.0390 Friday. Analysts rejected speculation that the ECB would intervene, but with London, the world's biggest currency market closed, trading was fairly calm, with the euro around the $1.0440 market.
In Frankfurt, a non-blue chip stock hogged the limelight as adult entertainment firm Beate Uhse continued its meteoric rise - just three days after the Flensburg, Germany-based chain of sex shops rocketed 94 percent in a record-breaking initial public offering, Europe's first in the adult entertainment sector. Uhse's stock closed 25 percent higher at 24.65 euros.
Blue chips heavyweight Deutsche Telekom (FDTE) had another strong session, continuing on from a buying spree Friday, after the telecom giant said its weighting on the benchmark Dax would soar from 5 to 13 percent after a share issue in mid-June.
Europe's largest carmaker, Volkswagen (FVOW) lost most of its early gains to end 1 percent higher at 60.19 euros. The stock jumped initially after carmaker's chief executive said his group had struck a licensing deal with Toyota. Buying interest waned after the Japanese auto company denied that any agreement had been reached.
An announcement by the German chemical company Bayer (FBAY)Sunday that it will float its Agfa-Gevaert subsidiary at an offering price of 22 euros, at the bottom end of its pricing range did little for its share price. Bayer's stock closed weaker. Shares of the unit will begin trading in Frankfurt and Brussels Tuesday.
In Paris, Oil giant Elf Aquitaine (PAQ) was in the spotlight after jumping into the bidding fray for Norway's Saga Petroleum Friday, launching a $2.16 billion cash bid that topped a hostile offer from state-controlled Norsk Hydro. Elf's shares ended 1.3 percent lower.
Confirmation by U.K. beverage company Allied Domecq (ALLD) that the $3.8 billion disposal of its 3,500-strong pub division to British leisure company Whitbread (WTB) agreed last Tuesday made its search for a merger partner for its spirits business more likely helped buoy Pernod Ricard (PRI) in Paris. Weekend reports suggested the French company was poised to launch a five-billion pound ($7.69 billion) bid for Allied's spirits business. Pernod's stock rose just over 4 percent.
But the strongest performance in Paris was by French retailer Pinault-Printemps Redoute. The stock jumped over 4.2 percent after a Dutch Court last week upheld Gucci's alliance with PPR against luxury goods company LVMH Moet Hennessy (PMH).
In Zurich, two banking groups that suffered particularly hard on fears of higher U.S. interest rates were particularly strong Monday. CS Group jumped almost 4 percent to end at 275.50 Swiss francs, while UBS gained just over 1.8 percent to close at 450 Swiss francs.
-- from staff and wire reports
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