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U.S. trade gap hits bourses
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August 19, 1999: 1:05 p.m. ET
Most European stocks trail Dow lower after U.S. trade deficit surges to record
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LONDON (CNNfn) - Europe's major markets slid in tandem with American markets Thursday after a record U.S. trade deficit sent the dollar tumbling to a seven-month low against the yen, dragging Wall Street stocks down with it.
London and Paris blue chips fell more than 1 percent, while Frankfurt slipped 0.8 percent and Zurich closed flat. Amsterdam the biggest loser of the day, saw its blue-chip AEX index give up 1.68 percent.
The U.K. blue chip gauge, the FTSE 100, closed down 1.35 percent at 6,118.0, having recouped some of its losses after falling as low as 6,104.2 shortly after the release of the U.S. trade figures. Slumping oil, telecom and bank shares further undercut the benchmark index.
In Frankfurt, the electronic Xetra Dax aped Wall Street's downturn after the U.S. trade deficit surged to a record high $24.62 billion in June. Local traders said the Dax could slip further in coming sessions as traders brace for next week's meeting of the U.S. Federal Reserve's monetary policy committee. Thursday's worse-than-expected trade numbers reinforced concerns about a credit tightening.
Earlier in the session, the Dax had firmed after the Ifo survey of business confidence came in slightly ahead of expectations, but the decline in U.S. stocks toward the end of the European session undermined that support, and the index closed down 0.83 percent at 5,186.85.
In Paris, the CAC 40 finished down 1.57 percent at 4,408.90, near its session low on thin volume of 1.3 billion euros ahead of next week's Fed meeting. Zurich's SMI bucked the negative trend, closing up 0.03 percent at 6,990.9 after drawing support from index heavyweight Roche.
The Eurotop 300, a pan-European gauge of the region's biggest stocks, ended 1.14 percent lower at 1,277.72.
Germany's Ifo report drove the euro back above $1.05 following weakness in Asian trading; by the end of European trade Thursday, the euro had firmed further, to around $1.0627.
However, the currency markets again were led by a dramatic slide in the dollar, which fell as low as 110.72 against the yen, a seven-month low, after the trade figures were released, rebounding slightly later on above 111 yen
The single currency benefited from euro-zone CPI data for July which showed a 1.1 percent year-to-year rise compared with 0.9 percent in June. Economists dismissed the rise as threatening any increase in inflationary pressures.
In London, the blue chip index came under pressure from oil, telecom and banking stocks. Oil giants Shell (SHEL) and BP Amoco (BPA) gave up 2.65 percent and 2.58 percent, respectively, while British Telecommunications (BT.A) retreated 2.11 percent. Mining concern Rio Tinto (RIO) skidded 4.13 percent, while rival Billiton (BLT) receded 2.48 percent.
British Energy [LSE;BGY] took the worst hit of the session, losing 6.31 percent to 498 pence as the market corrected erratic trades that drove up the stock Wednesday.
On the upside, Aerospace group Rolls-Royce (RR) advanced 1.74 percent to 264 pence after positive brokers' comments, while insurer Allied Zurich (ADZ) shot up 3.67 percent after Credit Suisse First Boston raised his profit estimate for Allied Zurich and its Swiss counterpart, Zurich Allied.
In Frankfurt, utilities Viag (FVIA) and Veba (FVBA) benefited from speculation of a possible tie-up. Viag jumped 4.87 percent to 521.20 euros, while Veba stock climbed 1.06 percent to 59.98 euros.
Lufthansa (FLHA) gained 0.8 percent despite reporting a 50 percent drop in first-half profits to 302 million marks ($163 million) and offering a downbeat outlook for 1999.
Paris stocks were almost uniformly down. Suez Lyonnais des Eaux (PLY) was suspended after the utility giant said it may boost its existing stake in New Jersey-based United Water Services. Following the market close, Reuters reported an industry source as saying Suez is poised to launch a takeover bid for both its waste management unit, Sita, and Belgium's Tractebel.
Oil titan TotalFina (PFP) and rival-cum-takeover-target Elf Aquitaine (PAQ) clinched respective first and third places on the CAC 40 decliners list after TotalFina's chief Thierry Desmarest said any new bid for Elf would not differ greatly from its initial offer. TotalFina shares ended down 5.38 percent at 123.1 euros, while Elf stock sank 4.39 percent to 169.7 euros.
In Zurich, pharmaceutical group Roche leapt nearly 2 percent to 17,480 Swiss francs after the company posted a 15 percent jump in first-half net income. Roche also predicted 'good' full-year results, excluding the impact of a vitamin price-fixing scandal and gains from the refloat of shares in its Genentech unit.
Food giant Nestle lost one franc to 2,962 after reporting the formation of a joint ice cream venture with Pillsbury's Haagen-Dazs unit. 
--from staff and wire reports
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