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Bourses ratchet higher
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June 18, 1999: 5:37 a.m. ET
European markets extend gains amid reassurances on U.S. rate prospects
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LONDON (CNNfn) - Europe's major markets extended their gains Friday, drawing continued support from Alan Greenspan's hints Thursday that the Federal Reserve is likely to avoid any drastic action on interest rates.
The Fed chief's comments about a possible "pre-emptive" rate strike helped allay fears on both sides of the Atlantic that the Fed will jack up rates more than 25 basis points at its end-of-June meeting.
London's leading index, the FTSE 100, was on course to reversing Thursday's slight loss, jumping 65 points to 6,559.1, a gain of 1 percent. But analysts warned of thin activity and possible see-saw trade in Friday's "double witching" session, marked by the simultaneous expiration of index futures and options.
Germany's electronically-traded Xetra Dax edged higher, climbing 68.05 points, or 1.3 percent, to 5,483.56 following its highest close since early January in the previous session.
Zurich's SMI made strong headway to put on 74.9 points, or just over 1 percent, to 7,2227.9.
The CAC 40 in Paris was up 0.5 percent at 4,532.44, ratcheting more gains a day after hitting a second successive record close Thursday.
Bourses continued to bask in Greenspan's cautious testimony before a congressional committee, which appeared to confirm that a hike in U.S. interest rates will be limited. This fostered speculation, sparked Wednesday by a benign consumer inflation report, that the market could see only one rate hike this year.
The words of the Fed chairman boosted Wall Street with all the main indices closing in positive territory. The Dow Jones Industrial average ended Thursday 56.68 points higher at 10,841.63.
Signs of a good start for U.S. markets later Friday also helped European stock indexes move higher. S&P 500 index futures jumped 4.20 points to 1,359.70, while brokers calculated fair value for the futures index - taking into account dividend payments and interest costs - at 1,353.26.
Swiss banking group Credit Suisse was up 2.50 Swiss francs at 285 after the Financial Times reported it was planning a huge overhaul of its Tokyo operations following the Japanese regulator's inquiry into its role in helping clients to conceal losses. UBS marched up 6.00 Swiss francs to 485.00.
Germany's second largest insurer Munich Re [FSE:FMUV3] could come under scrutiny when the group holds its annual shareholder meeting later Friday. The shares were up 2.50 euros at 178.50 in Frankfurt.
In the telecom sector, Deutsche Telekom (FDTE) was up 0.42 euros at 44.82 as the company continued to benefit from remarks by its chief executive officer Thursday that it would unveil a "nice" acquisition by the end of 1999.
Deutsche Bank (FDBK) advanced 0.65 euros to 54.85 after agreeing to sell its New Zealand operations and Bankers Trust Australia to U.S. insurer Principal Financial Group for $1.4 billion.
Gas distributor BG (BG) announced an organizational restructuring and denied it had received any takeover offers. The stock jumped more than 2 percent to 394 pence in London.
Satellite broadcaster BSkyB (BSY) attracted interest after a report in the Financial Times that the company could pass the 1 million subscriber mark for its new digital TV service within the next 6 weeks.
The stock rose nearly 2 percent to 604 pence. So far 800,000 people have signed, the newspaper reported, as BSkyB engages in a cut-throat competition for subscribers with rival On Digital, jointly owned by Carlton (CCM) and Granada (GAA). Carlton dipped 1 percent as investors worried On Digital is falling too far behind its Rupert Murdoch-controlled competitor. But Granada rose 1.3 percent.
Retailers also performed well on the FTSE 100, making up for some recent losses in the wake of Wal-Mart's agreed bid for number-three supermarket group Asda (ASSD). Tesco (TSCO) was up 3.6 percent, while rival Sainsbury (SBRY) added 0.3 percent, and pharmacy chain Boots (BOOT) leapt 3.55 percent. Kingfisher (KGF), whose own bid for Asda appears to have been foiled by Wal-Mart's leap into the British market, rose 2.4 percent. Asda was unchanged at 216 pence.
In Paris, defense group Thomson-CSF (PHO) spearheaded the early gainers before settling back slightly, Thomson was up 1.5 percent at 35.83 euros amid hopes that Alcatel (PCGE) may be allowed to take a stake in Thomson. Thomson also said it had received 1 billion euros in orders at the Paris air show.
-- from staff and wire reports
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