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Europe firms in early trade
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November 9, 1999: 5:13 a.m. ET
European markets lifted by oil data; merger talk boosts banks, drug stocks
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LONDON (CNNfn) - Europe's main markets held on to their opening gains by mid-morning Tuesday, as oil, banking and drug stocks helped underpin a modestly upbeat start to the session.
Frankfurt's Xetra Dax was the early pace setter as it enjoyed a near-1 percent gain to trade at 5,700.79, a jump of 53 points. The index was helped by renewed speculation of a merger in the banking sector and a larger-than-expected drop in the jobless rate for October.
London's FTSE 100 was unchanged from its opening levels as it stood 0.5 percent higher at 6,408.6, a jump of 34 points, in what is expected to be a cautious session ahead of a pre-budget report from Chancellor Gordon Brown. The speech, a taster of next March's full budget, will come shortly before the end of the trading day, and is expected to forecast strong economic growth and emphasize continuing restraint on public spending.
The CAC 40 in Paris slipped back slightly from its strong open to trade 0.4 percent higher at 5,014.65, a 20 point gain, after notching up a seventh consecutive record close Monday.
In Zurich, the SMI was under the most pressure from weakening U.S. futures as it fell back to trade just 10 points higher at 7,358.6.
Sentiment remained widely positive after the antitrust ruling against Microsoft (MSFT) failed to knock either Europe or Wall Street in the previous session. The Dow Jones industrial average ended just inside the black, while the tech-heavy Nasdaq composite set a fresh record as it jumped 1.3 percent.
U.S. stocks looked set for a flat open Tuesday, as S&P 500 futures turned negative to trade down 1.10 points on the Globex trading system at 1,383.50. London brokers calculated fair value, which takes into account the effect of dividend payments and interest costs, at 1,384.20.
The FTSE Eurotop 300, a broader measure of pan-European sentiment, reflected the upbeat mood across the continent, as it stood 0.6 percent higher at 1,377.78.
In the currency market, the euro tried but failed to break above the $1.04 level after it got a brief boost from the German jobless data, which was leaked before its official release. The single currency fell back to trade around $1.0383.
Oil stocks led the way higher across Europe, after the International Energy Agency said Tuesday that oil stocks across the northern hemisphere plunged in September.
In London, heavyweight BP Amoco (BPA) was one of the biggest gainers as it jumped 2.6 percent. Rival Shell (SHEL) gained 1.9 percent.
The two French oil majors, which are in the process of merging also benefited from the prospect of higher oil prices. Elf Aquitane (PAQ) jumped 3.4 percent, while TotalFina (PFP) gained 1 percent.
U.K. drug stocks were also in vogue as speculation continued to lift the sector. SmithKline Beecham (SB-) was up 2.35 percent, while Glaxo Wellcome (GLXO) stood 1.5 percent higher.
British Aerospace (BA-) surged almost 4 percent after broker Donaldson Lufkin & Jenrette highlighted the company as its top pick in the European aerospace and defense sector.
Colt Telecom (CTM) slipped 0.7 percent ahead of its third-quarter earnings due out later Tuesday.
In Frankfurt, banking stocks led the way after a report that the merger between Germany's second largest bank HypoVereinsbank (FHTM) and the number three Dresdner Bank (FDRB) was back on. The former soared 4.1 percent, while Dresdner jumped 2 percent.
Deutsche Telekom (FDTE) gained 1.8 percent on reports that it had scaled back the planned $10 billion trade sale of its German cable television network in favor of listing part of the business.
Lufthansa (FLHA) was almost 1 percent higher ahead of a widely anticipated announcement that it will buy a 20 percent stake in the U.K.'s third largest airline, privately-owned British Midland, from alliance partner SAS.
The move is seen as a threat to British Airways (BAY) as it will give the rival Star Alliance a major foothold at London's Heathrow, the world's busiest international airport. BA shares were down slightly in London.
In Zurich, drugs heavyweight Novartis was in the spotlight on a report that it was considering a merger with U.S. biotech giant Monsanto (MTC). The shares were up 0.3 percent.
Losses from another heavyweight, banking group UBS, weighed on the market as the shares fell 1.2 percent.
-- from staff and wire reports
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