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Bourses remain upbeat
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November 16, 1998: 12:45 p.m. ET
Interest-rate hopes and quiet in the Gulf give a lift to European shares
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LONDON (CNNfn) - A raft of good news drove European markets higher Monday, with the reduced threat of violence in the Gulf and hopes of U.S. interest rate cuts leading the way.
Wall Street opened strongly in late European trading, enabling bourses to build on earlier gains. The Dow was up 85 points when the London market closed.
Japan' enormous financial rescue package also boosted hopes the struggling economy might return to life.
Individual corporate news was mostly positive, with only a couple of party-poopers spoiling the positive mood.
France's Rhone-Poulenc and Germany's Hoechst appeared to be moving closer to their long-rumored merger.
In London the FTSE 100 closed the day off its highs, but still up 47.3 points, 0.9 percent, at 5,510.5.
In Frankfurt the Xetra DAX index jumped more than 3 percent, 141.96 points, to 4,785.76.
France's CAC 40 rose 1.7 percent, 59.62 points, to 3,621.85.
In Zurich the SMI rose 1 percent, 70.7 points, to 6,774.6.
The main loser in London was British Steel. The company unveiled dismal half-year earnings, and then watched its stock plummet 7 percent to 100 pence.
There was better news from Cable & Wireless, which announced plans to spend $1 billion on beefing up its Internet backbone in continental Europe. C&W shares rose more than 3 percent to 679 pence.
British American Tobacco enjoyed a strong run on hopes of a U.S. tobacco settlement. The shares jumped 3 percent to 532 pence.
London's insurance sector also returned to favor after a period on the sidelines. Government actuaries plan to reduce solvency requirements, boosting stock in Legal & General and Sun Life & Provincial by about 5 percent.
A bullish trading update by engineer TI Group helped its stock to record an 8 percent rise to 355 pence.
Hoechst shares jumped 3 percent to 78.3 marks in Frankfurt, but they were outdone by DaimlerChrysler.
The group's merger with U.S. carmaker Chrysler becomes official Tuesday, giving the company a much larger weighting in the DAX index. Investors scrambled for stock in advance of the change. DaimlerChrsler shares ended the day up 8 percent at 140.9 marks.
Hoechst's rivals Bayer and BASF joined in the fun, rising by 4 percent and 2.7 percent respectively.
Daimler's rivals also refused to be left at the roadside. BMW rose 3 percent to 1110 marks, and Volkswagen shares jumped 5 percent to 131.4 marks.
Auto stocks in Paris also put on a strong show, rivaling the rise in Rhone-Poulenc shares.
Rhone stock jumped more than 3 percent to close at 264.8 francs.
Renault wasn't far behind though. Renault shares finished at 227.5 francs, up 3 percent, and tire maker Michelin closed at 230 francs, up more than 4 percent.
At the other end of the scale were the oil stocks, which had cause to rue the apparent climbdown by Iraq. The crude price eased, pulling Elf Aquitaine down about 3 percent. Elf shares closed at 695 francs, with rival Total ending at 677 francs, off 4 percent.
Banking stocks caught the eye in Switzerland. UBS shares rose 4 percent to 383.5 francs, ahead of half-year earnings due for release Tuesday. CS Group moved ahead in sympathy, closing at 204 francs, up 3 percent.
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