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Europe shakes off jitters
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October 8, 2001: 1:35 p.m. ET
Major indexes rebound from earlier steep losses in the wake of U.S.-led attacks in Afghanistan.
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NEW YORK (CNNmoney) - Europe's major indexes were able to calm jitters and recoup earlier losses Monday following the commencement of joint U.S.-British attacks on targets in Afghanistan.
Bargain hunting in select technology and chip stocks helped reverse the course of European markets.
Britain's leading shares rebounded from sharp losses Monday to end slightly lower despite downward pressure from banking, plagued with scenarios of bad debt concerns, and transportation stocks.
"The European markets rebounded from earlier today, but a lot of uncertainty remains in the markets," said Khuram Chaudhry, European equity strategist with Merrill Lynch in London. "First there's the political backdrop. Secondly, with regard to the U.S. data on Friday, we had U.S. labor figures which weren't too encouraging. But markets across Europe have made considerable headway since Sept. 11. There's a degree of profit-taking going on."
London's FTSE 100 closed down 3.3 points at 5,032.70, edging back from Friday's three-week high. The CAC 40 blue chip index in Paris closed up 0.18 percent at 4,172,21, while Frankfurt's electronically-traded Xetra DAX edged up 0.19 percent to 4,495 in late trading on some bargain-hunting in tech stocks.
Analysts said the market shrugged off concerns about the start of military action in Afghanistan, which is accused of harboring Osama bin Laden, the chief suspect in the Sept. 11 attacks on New York and Washington.
"I don't think there is a huge amount of news content in the strikes. The news would be if they stirred up a major hornets' nest of political controversy or if there was an unacceptable amount of damage," said Andrew Bell, European equity strategist at Carr Sheppards Crosthwaite.
In the banking sector, Royal Bank of Scotland (RBOS) fell 2.8 percent. Abbey National (ANL) lost 5.2 percent after it revealed the surprise ousting of its corporate banking head, increasing concerns about the division's performance.
Telecom stocks made a 14-point positive contribution to the FTSE, largely due to a 2.9 percent rally for Vodafone (VOD).
Invensys (ISYS), surged to the top of the FTSE 100 leader board, rallying 23 percent. The engineering firm reassured investors, saying its first-half operating profit was in line with a profit warning it gave in July.
Transport stocks suffered after news that Railtrack, the owner and operator of the country's rail network, had been put into administration after the government turned down its latest request for state aid. Shares in the company have been suspended at Friday's closing price of 280 pence.
Investors bought into Deutsche Telekom stock, which rose 2.42 percent, because its dividend yield promised better returns than short-term fixed-income investments.
Siemens (FSIE) was 3.1 percent higher at 44.54 euros, Infineon rose 0.89 percent and passive electronic components maker Epcos (FEPC) was 1.24 percent higher.
In the financial sector, stocks remained weak with heavyweight insurance shares Allianz (FALV) and Munich Re (FMUV3) slashing the most points off the index amid fears that U.S.-led strikes in Afghanistan could provoke retaliation.
Allianz fell 1.72 percent, and Munich Re fell 2.08 percent, on worries they could face new and higher claims if more damage-causing attacks occur.
German bank HypoVereinsbank (FHVM) led decliners on the DAX, dropping more than six percent amid investor concern about its exposure to troubled Swissair Group and German media firms.
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But airline Lufthansa (FLHA), suffering along with other global stocks in the wake of the Sept. 11 attacks on the United States, rebounded, gaining more than four percent.
Bargain-hunting on oversold stocks like STMicroelectronics and TF1 helped French shares reverse losses in late trade.
Shares in broadcaster TF1 ended 7.59 percent higher at 23.39 euros, continuing their recovery from last week's steep fall to a year-low of 18.51 euros.
STMicroelectronics, Europe's second-largest chip maker, gained six percent, erasing Friday's losses.
France Telecom (PFTE) also added 3.44 percent, while mobile operator Orange closed up 2.47 percent.
In the United States at midday, stocks gave back earlier gains after the markets absorbed news of a second round of retaliatory attack on targets in Afghanistan. The Dow Jones industrial average was down 36.19 points to 9,084.06, and the Nasdaq Composite fell 1.96 points to 1,603.12. 
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