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Europe mixed, awaits ECB
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October 21, 1999: 5:21 a.m. ET
London, Paris lifted by Wall St. gains; Frankfurt dragged by telecom giant
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LONDON (CNNfn) - London shares were half a percent higher Thursday morning, inspired by a 1.8 percent rally on Wall Street and a huge cross-border deal in the European wireless sector. Modest gains in Paris were undercut by caution ahead of a European Central Bank policy meeting. Frankfurt slipped amid sharp losses in a telecom heavyweight.
In Europe, the ground was being prepared Thursday for a possible hike in European rates after hawkish comments earlier in the week by Bundesbank President and ECB council member Ernst Welteke.
An after-hours profit alert Wednesday from IBM (IBM) further rattled confidence in the durability of the latest Wall Street rally, preceded by last week's spectacular 630-point sell-off.
The spotlight was on telecoms, after Germany's Mannesmann (FMMW) popped a higher-than-expected $36 billion bid for Britain's third-largest mobile company, Orange (ORA), sparking hopes for more juicy deals across the industry. Orange stock initially soared more than 5 percent before retracing half of those gains to trade up 2.8 percent. Mannesmann shed 4 percent in Frankfurt.
London's benchmark FTSE 100 was up 0.47 percent at 6,034.7 following a slight opening gain. With the ECB meeting looming and interest-rate worries nipping at investors' shirtsleeves, the leeway for a strong advance was restricted.
Paris' CAC 40 remained up 0.22 percent at 4,587.92, after closing down 0.3 percent at 4,577.83 on Wednesday. Trade is likely to be subdued with little concrete corporate news to distract.
In Frankfurt, the electronically-traded Xetra Dax extended early losses to trade down 0.46 percent at 5,266.67. Zurich's SMI also headed south, dipping 0.28 percent to 6,383.9, despite a 0.85 percent gain in pharmaceutical heavyweight Novartis after it posted a 2 percent rise in nine-month sales in ongoing operations.
The FTSE Eurotop 300, a pan-European gauge of the wider market mood, was flat.
Wall Street was indicated for a lower opening Thursday after the Dow Jones and Nasdaq jumped 1.8 percent and 3.7 percent, respectively, in Tuesday's session. S&P 500 futures contracts were off 7.40 points at 1,285.10 on the Globex trading system, Fair value, a calculation that accounts for dividend payments and interest costs, was 1,299.14.
Among major corporate decliners, Dutch business software maker Baan plunged 11.72 percent, to 11.52 euros, in Amsterdam after reporting a larger-than-expected third-quarter loss amid a sharp decline in new software sales. Baan's loss of $24.7 million marked its fifth straight quarterly decline.
Shares in British American Tobacco (BATS) plunged nearly 8 percent after a legal setback for the tobacco industry in a U.S. court. An appeals court in Florida rejected an appeal against a liability verdict for up to one million sick smokers brought by Philip Morris.
In London, telecom giant Vodafone AirTouch raced ahead 4.28 percent on speculation the company would look for a mega-deal in Europe in response to Mannesmann's offer for Orange.
On the other side of the channel, France Telecom (PFTE) fell 2 percent despite a report that the company plans to bid for one of five next-generation mobile phone licenses to be auctioned by the British government before next April. The Financial Times said France Telecom plans to use British partner NTL as a bidding vehicle.
French food group Danone (PBN) powered up 4 percent, to 237.2 euros, after posting better-than-expected third-quarter results and market-pleasing nine-month sales figures.
French car-parts maker Valeo (PFR) jumped 3.6 percent after Unisia Jecs Corp. of Japan said the companies had agreed to explore the feasibility of a joint venture to develop, produce and sell car clutches.
--from staff and wire reports
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