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Bourses fret amid rate talk
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June 29, 1999: 8:55 a.m. ET
London and Frankfurt head lower despite prospect of modest rate hike
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LONDON (CNNfn) - European markets suffered mixed fortunes by midday Tuesday, with London and Frankfurt giving up early advances. Investors remained timid despite expectations of a modest quarter-percentage-point hike in U.S. interest rates by the Federal Reserve Wednesday.
In London, the benchmark FTSE 100 slid 66 points, or just over 1 percent, to 4,486.33 after being 20 points head, with banking and drug stocks overcoming some stock-specific corporate news.
Frankfurt's Xetra Dax traded warily around a narrow range, dipping into negative territory with a 1 point drop to 5,355.84.
However, the CAC 40 in Paris continued its recent recovery with a 0.5 percent rise to 4,486.33 and the SMI in Zurich posted a solid 0.6 percent gain at 6,990.7.
The FTSE Eurotop 300 of the largest pan-European stocks reflected the narrow trading, reversing an early advance to trade down 2 points at 1,310.82.
Wall Street was expected to consolidate after its triple-digit gain Monday, with Globex S&P Futures indicating a modest fall at the open.
The fear of a full half-point rise in U.S. interest rates still gripped investors, with rate-sensitive banking stocks taking the greatest hits. Bank of Scotland (BSCT) fell 4.3 percent, Lloyds [LSE:LLOY ] gave up almost 1 percent and HSBC (HSBA), tied to Asian economic performance, lost 2.2 percent.
With losers outgunning rising stocks by 2 to 1, it was left to some long-running takeover talk to prop up the market.
Allied Domecq (ALLD) added 0.8 percent at 612 pence as rival bidders for its pub assets sweetened their bids. Hotel and leisure group Whitbread (WTB) lost 1.6 percent after announcing a share buyback plan while rival bidder Punch Taverns added 4 percent to its cash offer.
Industrial gases group BOC (BOC) gained 3.6 percent at 1,256 amid reports that it has been approached again by France's Air Liquide (PAI) after rejecting an earlier joint bid alongside U.S.-based Air Products. Air Liquide stock advanced 0.3 percent in Paris.
Security group Williams (WLMS) fell 2.8 percent to 408 pence amid reports that its takeover talks with Tyco International have run into trouble after a failure by both sides to agree on a price.
British Telecom {LSE:BT] lost a 1 percent gain to trade down 1.6 percent at 1,072 pence despite securing U.S. regulatory clearance for its $10 billion global joint venture with AT&T (T). BT said the development paved the way for a regulatory green light from all quarters by the autumn.
Airport operator BAA (BAA) lost 1.1 percent after the company outlined the impact of the end of duty-free shopping on internal European flights. Retail sales account for more than half of BAA's sales.
In Frankfurt, financial and telecom stocks led the small band of gainers. Mannesmann (FMMW) held on to a 2.2 percent rise at 147.45 euros after Goldman Sachs lifted its earnings estimate for the telecom firm.
Deutsche Bank (FDBK) added 0.8 percent at 57.21 euros.
In Paris, Suez Lyonnaise des Eaux (PLY) jumped 3.7 percent as investors continued to applaud its purchase of U.S.-based Nalco Chemical (NLC).
Defense group Thomson-CSF (PHO) advanced 0.67 percent after an upbeat trading assessment at its annual general meeting.
Investment certificates in France's Crédit Lyonnais (PCI) fell 4 percent Tuesday in Paris after the French government priced its planned share issue at the tope end of its range, at 26.2 euros. Holders of the investment certificates will have to pay 0.6 euro for one of the new shares. 
-- from staff and wire reports
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