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Europe stumbles at close
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February 24, 2000: 1:00 p.m. ET
Late-day turnaround wipes out rally as Wall St. retreats; Paris finishes firm
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LONDON (CNNfn) - Europe's biggest markets ended mostly lower Thursday after an eleventh-hour turnaround triggered by early weakness on Wall Street.
London and Frankfurt shed about 1 percent, wiping out a daylong tech-led rally that had swept German blue chips to a new high at one point.
Paris defied the overall European trend, closing up nearly 1 percent, just above its lowest level of the day. Zurich lost about three quarters of a percent.
Europe's markets, which had rallied through most of the day on the back of sizzling tech, telecom and media stocks, retreated in tandem as Wall Street's Dow Jones industrial average racked up early losses of as much as 2 percent. Those losses eventually spilled over into the Nasdaq, which had begun by building on Wednesday's 3.8-percent surge into record territory before backtracking into the red, further infecting the mood in Europe.
London's benchmark FTSE 100 ended down 0.9 percent, or 57.4 points, at 6,086.7, more than 200 points off its morning high of 6,288.8 points.
The electronically traded Xetra Dax in Frankfurt finished 0.8 percent lower at 7,640.53, weighed down by a sharp decline in utility company RWE after it issued disappointing profit amid plans to shed more than 10,000 jobs. Earlier, the Dax had soared to a new lifetime high of 7,813.20.
The SMI in Zurich closed 0.7 percent lower at 7,043.8.
David Thwaites, equity strategist with BNP Securities in London, said European markets had begun the day by trying to catch up with Wednesday's rally on Wall Street, but executed a belated about-face when the Dow Jones and the Nasdaq were unable to sustain that momentum shortly after markets opened in New York Thursday.
Thwaites attributed Thursday's eleventh-hour turnaround to emerging concerns over the high-flying valuations in Internet-driven growth stocks.
"Essentially, markets have been range-trading for some time, while technology stocks have been (rising strongly), and now with worries about interest rates and inflation becoming more acute, that's not being sustained," Thwaites said. We're beginning to see a few more doubters emerge about the new economy stocks.
The FTSE Eurotop 300, a pan-European gauge of the region's larger stocks, ended about 1 point lower at 1,542.47, pressured by declines in its aerospace and defense, mining, forestry and paper, beverage chemical and food product segments. These offset gains in the health, information technology and media sub-indexes.
In the currency markets, the euro fell more than a cent from its Wednesday peak to trade at 99.32 cents as traders expressed disappointment at its failure to move firmly ahead against the dollar. A 2 percent annualized rise in German producer prices, the strongest growth rate in more than four years according to data released Thursday, added to concern Europe's economic expansion may stoke faster inflation.
In London, the biggest drag was provided by the index's two oil majors, BP Amoco (BP-A) and Shell Transport & Trading (SHEL), which shed 2.7 percent and 3 percent, respectively, collectively shaving 16 points from the FTSE blue chip advance. Local traders attributed the energy firm's declines to continued shifting of funds out of big blue chips and into Vodafone AirTouch (VOD) following Wednesday's new reweighting. Shares of Vodafone, which now accounts for 13.9 percent of the total FTSE 100 weighting, ended up 1.2 percent. But index rival British Telecommunications (BT-A) tumbled 4.8 percent, drawing back from recent gains. BT clipped 17 points from the FTSE 100 advance.
AstraZeneca gets heartburn
In the drug sector, shares of Anglo-Swedish drug firm AstraZeneca (AZN) fell 9.9 percent, leading the FTSE 100 decliners, after posting an unexpected 3 percent fall in fourth-quarter net profit. Investors were also reportedly concerned that the company is overly relying on its ulcer drug, Losec.
The number-two FTSE 100 loser, Reed International (REED) slid 9.7 percent as investors worried over how a new Internet investment strategy would impact its short-term earnings. Reed is the London-listed co-owner of Anglo-Dutch business and educational publisher Reed Elsevier, which Thursday announced 1,500 job cuts and disclosed plans to invest 750 million pounds ($1.2 billion) in online ventures over the next three years. Amsterdam-listed Elsevier tumbled 9.8 percent after rising as much as 6 percent in early trade. British Airways (BAY) closed 5.5 percent higher after announcing plans Wednesday for an online travel agency that could slash its cost base.
Diageo (DGE), the world's largest beverage producer, gave up 5.5 percent. Earlier, Diageo had posted profit near the high end of expectations. But the stock took a hit as analysts deemed the quality of the company's revenue growth to be less than satisfactory, boosted in part by beefed-up millennium spending.
Technology stocks ended mixed. Computer services firm Logica (LOG) soared 14.4 percent, following a big gain in the previous session after the company posted a 62 percent rise in first-half earnings and hinted at major contracts to be announced in the near future. Chip designer ARM Holdings (ARM) climbed 4.8 percent. But computer services firm Sema Group (SEM) lost 0.8 percent while software company Sage (SGE) fell 4.2 percent.
In Paris, technology and media shares enabled the CAC 40 to avert the same fate as its peers in London, Frankfurt and Zurich.
Telecom equipment maker Alcatel (PCGE) rose 3.7 percent, ending off earlier highs, as it wiped out some of its heavy losses Wednesday in response to its plan to acquire Canadian rival Newbridge Networks (NN: Research, Estimates). Computer services consultant Cap Gemini (PCAP) gained 7.6 percent while retailer Carrefour (PCA) finished up 4.3 percent after beating expectations with a 1.7 percent rise in 1999 pre-tax earnings and outlining its e-commerce strategy. Pay-TV operator Canal Plus (PCAN) leapt 6.9 percent.
French conglomerate Lagardère (PMMB) jumped 7 percent amid news that Deutsche Telekom had formed an Internet-related cooperation venture with Compaq. Largardère owns a stake in T-Online, Deutsche's Internet service provider.
In Frankfurt, Siemens (FSIE) ended 0.6 percent lower despite making an upbeat forecast for 2000 sales and confirming plans for a U.S. share listing next year. Software publisher SAP (FSAP) closed up only 0.3 percent, well off an earlier 6 percent surge on the back of the Nasdaq's advance. Deutsche Telekom (FDTE) added almost 3 percent.
Energy utility RWE (FRWE) was the main drag on the index, falling 6.7 percent after the company reported an 10.8 percent decline in 1999 earnings and disclosed plans to cut more than 10,000 jobs as part of a massive restructuring.
Amsterdam was buoyed by an 11 percent surge in troubled business software maker Baan after a letter from the company's management improved the mood surrounding the stock. 
-- from staff and wire reports
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