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Europe mixed, rate fears roil
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June 25, 1999: 3:27 p.m. ET
London ends slightly higher, others slip as Fed guessing game distracts
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LONDON (CNNfn) - The bulls' return to Wall Street early Friday didn't impress most European markets as continuing uncertainty over U.S. interest rates crowded out any optimism over a downturn in bond yields. London edged fractionally higher while other major markets slipped.
British stocks held on to modest gains Friday to close slightly higher as firming bond yields on Wall Street spurred a rally in U.S. equities after four days of declines.
London's benchmark FTSE 100 reversed early losses to close up 0.3 percent, or 18.7 points, at 6,435.4, pulled higher by a firmer performance by the Dow Jones industrial average, which was 101 points higher at the close in London. For the week, the FTSE 100 was down 1.4 percent, or 92.4 points.
Germany's electronically traded Xetra Dax closed 0.5 percent lower at 5,301.21, a loss of 26.39 points. Trading was particularly thin as investors hesitated to make any major moves ahead of the Federal Reserve's two-day policy meeting beginning next Tuesday.
Shares of Deutsche Telekom (FDTE), the most actively traded stock in Frankfurt Friday, fell 1.65 percent to 41.68 euros as investors attempted to drive its share price down ahead of a 285.9 million new-share issue Monday.
In Paris, the CAC 40 eased 0.4 percent, or 17.32 points, to finish at 4,416.89, uninspired by a stronger start on the Dow. Traders feared that the Fed could hike rates more than the widely expected quarter of a percentage point.
Zurich's SMI led the regional decliners, slumping 1 percent to end at 6,960.9, a 70.1 point drop. Bucking the downturn, energy and engineering firm ABB added 3.2 percent to close at 2,450 ahead of the launch of trading in the company's new unified share issue next week, which will be more heavily weighted in the SMI index.
Madrid's Ibex 35 fell 0.6 percent, weighed down by a slide in heavyweight Telefonica after a ratings downgrade.
Across Europe, many investors kept to the sidelines Friday as they awaited the Fed meeting. Traders fear that the Fed may enact a larger-than-expected series of rate hikes that could sour buying sentiment in the United States and cause a domino effect in European markets.
In London, banking stocks remained under pressure ahead of the rate announcement. Royal Bank of Scotland (RBOS) shed 1.5 percent despite refuting suggestions it might top the bid for insurer Scottish Widows by Lloyds (LLOY), whose shares fell 2 percent to 877.5 pence.
British American Tobacco (BATS) jumped 5.3 percent, while Cadbury Schweppes (CBRY) gained 4.55 percent to 399 pence.
Insurer Prudential LSE:PRU] rode a wave of bid speculation to finish more than 4 percent higher while media group United News & Media (UNWS) added 2.35 percent to end at 611 pence, as expectation grew it may boost its regional newspaper portfolio.
In Frankfurt, truck and machinery maker MAN topped the gainers list, spurting 4.2 percent on a technical bounce. Carmaker BMW (FBMW) staged a partial rebound from sharp losses Thursday to end 2.4 percent higher.
Deutsche Bank (FDBK) pulled back 0.27 euros to 56.40 euros amid reports that former Bankers Trust head Frank Newman will leave the newly-enlarged group following Deutsche's takeover of BT.
Dresdner Bank (FDRB) gained almost 2 percent to 36.40 euros despite a slew of ratings downgrades.
DaimlerChrysler shares added 0.35 euros to 36.05 euros after its chief said the carmaker is seriously considering listing its Dasa aerospace units.
In Paris, shares of oil producer Elf Aquitaine (PAQ) slid 4.56 percent to 136.00 euros after analysts confirmed the company had asked brokers to downgrade its earnings outlook for the first half of the year.
Strong consumer spending data for May did little to help retail stocks, with supermarket group Casino (PCO) ending down nearly 1 percent and luxury goods maker LVMH (PMC) sliding 1.9 percent.
-- from staff and wire reports
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