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Bourses labor to gains
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September 6, 1999: 12:45 p.m. ET
German, U.K. blue chips lifted by telecom leaders, retailers hurt Paris
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LONDON (CNNfn) - Europe's markets -- with the exception of Paris -- ended mainly in the black Monday, as investors focused on local issues in the absence of any guidance from Wall Street, closed for the Labor Day holiday.
Friday's strong rally by U.S. stocks, following benign U.S. employment data, helped underpin sentiment. But the main movers were largely driven by events in each home market, with telecom stocks leading U.K. and German blue chips higher.
London's FTSE 100 gained 0.7 percent to end at 6,375.7, a gain of 44 points. A relatively cautious session was spiced up by strong gains from telecom heavyweight Vodafone AirTouch (VOD). Financial stocks failed to get much lift from confirmation of a $17 billion merger.
The electronic Xetra Dax in Frankfurt put in the strongest performance of the main bourses, closing 1.2 percent higher at 5,400.55, a rise of 64 points. A strong showing by Deutsche Telekom (FDTE) helped stocks shrug off a bruising defeat for the ruling Social Democrats in two state polls. The setback for the party in the states of Brandenburg and Saarland was seen as hindering a multi-billion-dollar economic reform package.
Paris's CAC 40 ended down 4 points at 4,668.04, shedding the mild gains it had held on to for most of the session. Retail and automotive stocks led the way down.
Zurich's SMI closed 0.9 percent higher to end at 7,200.1, a rise of 63 points.
The generally upbeat performance was reflected in the FTSE Eurotop 300, a broader gauge of the largest pan-European stocks, which added 0.9 percent to close at 1,328.71.
London endured a relatively quiet session with Wall Street closed and ahead of the Bank of England's two-day policy committee meeting Tuesday. Economists are split as to whether the bank's governors will push through a quarter-point hike.
Vodafone AirTouch was behind the bulk of gains on the U.K. blue chip index. The stock closed 3.6 percent higher after the world's largest cellular network operator confirmed it is talking to Bell Atlantic about linking up their U.S. mobile networks.
Rival Orange (ORA) also made strong gains to finish 2.2 percent higher. U.K. cable operator Telewest (TWT) soared more than 4 percent.
Telecom stocks delivered around half the session's gains.
But the biggest blue chip gainer of the day was the spiits company Allied Domecq (ALLD). The stock soared 7.7 percent in a largely technical reaction to the company's disposal of its pub division to privately-owned Punch Taverns in a $4.5 billion deal finalized in August.
The major corporate development of the day was confirmation of the $17.2 billion takeover of insurer Legal & General (LGEN) by NatWest Bank (NWB). Market reaction was muted, however, after stocks in the sector had rallied last week when the two companies confirmed they were in talks.
Natwest closed 0.8 percent lower amid fears the company was overpaying for L&G, which dropped 1.6 percent.
In London, tobacco shares were lifted by a Florida court's ruling on Friday that damage claims brought against cigarette makers by ailing smokers must be tried on a case-by-case basis, rather than collectively.
British American Tobacco (BATS), which will now no longer face the prospect of a punitive lump-sum payment in a Florida class-action suit, closed off its highs but still ended up 1.3 percent. Rival Imperial Tobacco Group (IMT) fared better as it closed 3.4 percent higher.
In Frankfurt, the equity markets appeared to shrug off the defeat for Prime Minister Gerhard Schroeder's party at the polls over the weekend. The losses in two German state elections was seen as weakening the chancellor's hand in Germany's parliament and jeopardizing a program which includes 30 billion marks in budget cuts.
But Schroeder insisted the reforms remained on course and said he would work with lawmakers to push the austerity program through.
Deutsche Telekom led the way. The biggest single constituent in the DAX jumped 3 percent, boosted by a report that Deutsche Bank (FDBK) had bid 3 billion marks for one of the telecom giant's cable franchises.
HypoVereinsbank also surged 3 percent after Deutsche Bank CEO Rolf Breuer said he was considering cooperation in the retail sector with both Hypo and Dresdner Bank (FDRB), the country's number two and three banks. Dresdner's shares closed 1.5 percent higher, while Deutsche added 0.6 percent.
The biggest blue chip gainer in Frankfurt was retailer Metro (FMEO), which soared 4.2 percent, boosted by further speculation about its future following the planned mega-merger in France.
In Paris, the two companies planning to create the world's second largest retailer took a hit after French finance minister Dominique Strauss-Kahn raised possible competition concerns over the planned merger of Carrefour (PCA) and Promodès (PPE). Promodès fell almost 4 percent, while Carrefour lost more than 3.2 percent.
Rival Casino (PCO) celebrated the possible hitch and closed 2.5 percent higher.
Car makers had a poor session. Renault (PRNO) shed almost 3 percent and Peugeot (PUG) slipped 1.6 percent.
-- from staff and wire reports
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