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European stocks edge lower
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August 24, 1999: 5:53 a.m. ET
Only Paris defies downturn as bourses turn cautious ahead of U.S. rate decision
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LONDON (CNNfn) - European shares edged downward by mid-morning Tuesday, as traders refrained from any big moves ahead of a meeting in Washington of the U.S. Federal Reserve later in the day. Paris blue chips clung on to early gains, defying the continental mood.
The Fed is expected to unveil its interest rate decision after European markets close Tuesday. Rate fears have subsided in recent days, however, amid expectations that the Fed will enact only a mild monetary tightening that will hold until at least the end of the year.
In London, the FTSE 100 defied early expectations of a slight rise a day after the blue chip gauge soared 2.3 percent on the back of shining bank and pharmaceutical stocks. By mid-morning the benchmark index was off 0.4 percent, or 25.6 points, at 6,296.5 as traders kept a wide berth of big bets.
Germany's Xetra Dax continued to retreat, easing 0.32 percent to 5,285.11, while the SMI in Zurich traded down 0.73 percent at 7,095.4.
Alone among major markets, Paris stocks remained above the surface, with the CAC 40 index climbing 0.43 percent to 4,506.75 amid buying of several heavyweights.
Investors shrugged off the record close by the Dow Jones industrial average Monday. The index jumped almost 200 points to close at 11,299.76.
U.S. traders took a bullish view of the expected 25 basis-point hike in interest rates, betting that it would be the last hike of the yearly cycle. Tech stocks also rallied, with the Nasdaq composite index surging almost 2.7 percent.
Their European counterparts exercised caution, however, as Wall Street looked set for a flat open later Tuesday. S&P 500 futures on the Globex trading system were down 2.20 points at 1,364.00. London brokers estimated fair value for the S&P 500 index, which takes into account the effect of dividend payments and interest costs, at 1.364.17.
The dollar receded slightly from a one-month high against the euro of $1.04 that had followed the Dow's 1.8 percent rally Monday. The U.S. currency also eased from Monday's one-week high against the yen of 112.80 yen.
In France, oil giant Elf Aquitaine (PAQ), cheered investors with a promise of a better second half after unveiling a fall in first-half net earnings of 15 percent to 590 million euros ($627 million). Elf shares jumped 3.1 percent to 173.0 euros, clinching the top spot at the head of the CAC gainers list.
Another big gainer was France Telecom (PFTE), which was up nearly 2 percent after releasing fresh details Monday of its plans to boost Internet use, including a new flat rate for subscribers.
Drugs giant Sanofi-Synthélabo (PSQ) lost some ground after reporting a rise in first-half net income of 43 million euros to 283 million. The stock slipped 0.72 percent to 41.60 euros.
In Germany, engineering group Linde (FLIN) was unchanged at 58.40 euros after reporting a 3 percent rise in pretax profit to 342 million marks ($186 million).
Continued merger speculation among financial stocks helped lift insurer Munich Re (FMUV). The firm was up 1.2 percent.
Tech giant Siemens (FSIE) lost 0.6 percent to 79.30 euros as traders expected long-awaited details of a joint venture with Japan's Fujitsu that the companies hope to transform into Europe's number-one personal-computer maker.
In Switzerland, UBS shed 3.8 percent after the banking group reported first-half net earnings of 3.96 billion Swiss francs ($2.63 billion), a rise of almost 13 percent. The results came in at the bottom end of expectations and the shares were 1.2 percent lower at 440 Swiss francs.
-- from staff and wire reports
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