LONDON (CNNfn) - London blue chips ended virtually unchanged Tuesday, helped by an early triple-digit-point spurt on the Dow Jones industrials that countered weakness in telecom and technology stocks. But Paris slipped half a percent and Frankfurt fell almost 1 percent as investors dumped growth stocks ahead of an anticipated interest rate hike in the United states.
The benchmark FTSE 100 in London closed down just 6.6 points, or 0.1 percent, at 6,617.9, with telecom and technology stocks providing the brunt of the downward drag. By the time London markets closed, however, the tech-laden U.S. Nasdaq index had reversed its early losses, joining the Dow Jones industrial average in the plus column. London blue chips barely reacted to a budget speech by Chancellor Gordon Brown.
The CAC 40 in Paris closed down half a percent at 6,320.87, while Frankfurt's electronically traded Xetra Dax finished 0.8 percent lower at 7,807.93, weighed down by losses in tech bellwethers SAP and Siemens that more than countered strength in carmaker BMW. Among the big four markets, only the SMI in Zurich bucked the downtrend, gaining 1.4 percent to 7,266.3, propped up by pharmaceutical giant Novartis.
The pan-European FTSE 100, a broader gauge that gives an indication of the regional mood, ended a minimal 1.66 points higher at 1,625.80. Sharp gains in traditional "old economy" sectors such as water, steel, beverages and food neutralized losses in "new economy" computer, media and telecom stocks. The index's tobacco segment slid 4 percent after a setback for the industry in a California court case bit into shares of British American Tobacco in London.
Most of the market attention Tuesday was riveted on events across the Atlantic, where the U.S. Federal Reserve is expected to raise its key lending rate by a quarter-percentage point to 6 percent later in the day.
In London, telecom media and technology stocks lopped more than 60 points off the FTSE 100 advance. By contrast, bulwarks of the traditional economy - pharmaceutical, food and oil stocks - added 40 points.
New FTSE 100 entrants get cold shoulder
Several new entrants to the FTSE blue-chip index from the high-tech and biotech sectors suffered sharp setbacks as investors continued reweighting their portfolios between "new economy" issues and "old economy" stalwarts. Irish-based internet security firm Baltimore Technologies (BLM) plummeted 12.5 percent, outdone in the minus column only by a 13.6-percent drop in Celltech Group (CCH), the first biotechnology company to enter the FTSE 100. Anglo-Norwegian health-care company Nycomed Amersham (NAM) declined 3.6 percent.
Two other mainstays of the blue chip tech cluster, chip designer ARM Holdings (ARM) and Internet service provider Freeserve (FRE), also suffered erosion. ARM tumbled 10 percent, while Freeserve dropped 9.7 percent.
Mobile-phone operator Vodafone AirTouch (VOD), the FTSE 100's biggest component by weighting, dropped 0.6 percent, Telewest (TWT) retreated 7.1 percent and Colt Telecom (CTM) shed 8.3 percent. The second-biggest stock on the benchmark index, oil producer BP Amoco (BP-A), rose 1 percent, however, while drug firm Glaxo Wellcome (GLXO) advanced 4.1 percent, AstraZeneca (AZN) gained 3.4 percent and SmithKline Beecham (SB) added 1.9 percent. .
In France, investors spurned technology, media and telecom stocks with much of the same zeal as in London. Aerospace electronics group Thomson-CSF (PHO) shed 4.9 percent and data network operator Equant (PEQU) gave up 2.8 percent.
Europe's largest pay-television company, Canal Plus (PAN), fell 1.6 percent, while computer and technology services group Cap Gemini (PCAP) gave up 2.9 percent. Bucking the trend, microchip maker STMicroelectronics (PSTM) advanced 2.7 percent.
Two high-profile tech companies in Frankfurt went into reverse a day after posting sharp gains. Accounting software maker SAP (FSAP) fell 6.2 percent, while technology and engineering conglomerate Siemens (FSIE) dropped 3 percent. Index heavyweight Deutsche Telekom (FDTE) posted a 2.5 percent decline.
Chemical maker BASF (FBAS) dropped 1.4 percent as market players deemed it is paying to much for the crop-protection business of American Home Product Corp. (AHP: Research, Estimates), called Cyanamid.
The losses more than offset a sharp gain for carmaker BMW (FBMW) in the aftermath of last week's decision by the company to dispose of its money-losing U.K. Rover subsidiary. BMW shares shot up 7.8 percent as its controlling Quandt family dismissed a report that chairman Joachim Milberg is coming under pressure to resign after a little more than a year in the post.
Swiss pharmaceutical maker Novartis climbed 3 percent, while its compatriots Swatch Group, a watchmaker, advanced 1.8 percent and Zurich Allied, the country's biggest insurer, jumped 3.9 percent, propelling Zurich's SMI higher despite a slide of 5.6 percent in goods-inspection company SGS. 
-- from staff and wire reports
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