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Bourses bogged down
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June 25, 1999: 5:49 a.m. ET
Europe's markets lack momentum ahead of Tuesday's Fed meeting; Wall St. softness weighs
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LONDON (CNNfn) - Europe's biggest bourses remained in a rut Friday morning as traders trained their sights on next week's policy meeting of the U.S. Federal Reserve. European traders fear the Fed may initiate a series of graduated rate hikes that could hurt U.S. equities and spill over into Europe.
Weakness on Wall Street continued to cast a pall on sentiment across Europe.
In London, the FTSE 100 was down 0.4 percent, or 24.1 points, at 6,392.6 as bank stocks came under pressure while the CAC 40 in Paris poked into the black but remained flat at 4,435.53.
Germany's electronically-traded Xetra Dax pared some of its early losses but was still down 18.08 points, or 0.3 percent, at 5,309.52, while in Zurich the SMI lost 39.8 points, or 0.6 percent, to 6,991.2.
The FTSE Eurotop 300 of the largest pan-European stocks shed nearly 8 points to 1,307.75 as investors continued to focus on a narrow range of stocks. The euro continued to firm ahead of the U.S. rate decision, trading around $1.0463, off an overnight low of 1.0407.
The Dow was indicated to open flat Friday. Prices of S&P 500 futures contracts on the Globex system were off 4.40 points at 1328.40. But fair value, which takes into account dividend payments and interest cost, was 1,327.82.
European investors took their cue from a 190 point slump in Tokyo overnight, prompted by the sharp fall on Wall Street Thursday.
U.S. stock markets suffered sizable losses Thursday as bond yields headed higher and speculation rose that an expected Fed rate rise next week might be bigger than initially anticipated.
The Dow Jones industrial average lost 132.03 points, or 1.2 percent, to end at 10,534.83. The Nasdaq Composite shed 44.13 points, or 1.7 percent, to 2,553.99 and the S&P 500 index lost 17.28, or 1.3 percent, to 1,315.78.
Bourses were seen adopting a cautious stance Friday, with revised U.S. GDP data due out later today. The report may give some guidance as to what the Fed will do next Tuesday.
In London, venture capital firm 3I (III) fell nearly 1 percent, recouping some heavy earlier losses after investors took fright at its plans for a major U.S. expansion
Heavyweight banking and oil stocks were all facing selling pressure, with Royal Bank of Scotland (RBOS) shedding 2.6 percent to 1,328 pence.
In Frankfurt, Deutsche Telekom (FDTE) fell sharply as it prepared to price its rights issue, shedding 1.8 percent to 41.90.
Deutsche Bank (FDBK) also slipped 1.8 percent, to 55.65 euros, amid reports that former Bankers Trust head Frank Newman would leave the newly-enlarged group following Deutsche's takeover of BT.
The auto sector had a mixed performance. DaimlerChrysler shares were off nearly 1 percent, at 84.80 euros after its chief said the carmaker was seriously contemplating a listing of its Dasa aerospace units. But the CEO said the listing probably wouldn't go through this year. Volkswagen (FVOW) gave up just over 0.6 percent, while BMW - which earlier this week rolled out a multi-year investment plan for its ailing U.K. Rover subsidiary that includes an aid package from the British government - retreated 1.1 percent. The losses came as the European Union deferred a ruling on a car recycling law.
In Paris, Canal Plus (PAN) was among the handful of gainers, adding 1.1 percent to 266.3 euros as it awaited a decision on French TV soccer rights.
British retailing giant Marks & Spencer (MKS) was down 1.2 percent at 352 pence amid speculation of a possible tie-up with supermarket rival Sainsbury (SBRY) and talk of another earnings warning ahead. Sainsbury stock was flat at 384 pence.
Mining concern Rio Tinto (RIO) leapt nearly 1.5 percent in London, pulled higher by news that a competitor, Broken Hill Proprietary Co., plans to halt its North American copper mining operations later this summer. Billiton (BLT) shares rose 1.7 percent to 209 pence.
--from staff and wire reports
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