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Bourses eye Greenspan
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January 20, 1999: 5:34 a.m. ET
European markets head higher, but testimony to Congress will be crucial
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LONDON (CNNfn) - European stock exchanges moved higher in early trade Wednesday, as bargain hunters stepped back into the markets pushing the major indexes up to 2 percent higher.
Trading is likely to be relatively muted however, with many market participants keeping a close eye on U.S Federal Reserve Chairman Alan Greenspan's testimony to Congress. That is likely to have a major impact on trading late in the European markets' session.
Signs from overseas were mixed. Japan took the lead overnight in Asia, with hopes of a government-inspired boost to the real estate sector helping the index to rise 2 percent and breach the 14,000 level.
The news from New York was less encouraging as investors, swamped by a raft of fourth-quarter earnings reports, left the Dow Jones index only just in positive territory while the Nasdaq posted a new record.
In London the FTSE 100 jumped 84 points, 1.4 percent, to 6,111.3, boosted by poor retail sales data for December, which should increase pressure for lower interest rates. Minutes from the Bank of England's latest Monetary Policy Meeting also encouraged such hopes.
In Frankfurt the Xetra Dax gained 1.5 percent, 77 points, to 5,115.09, and France's CAC 40 bounded 58 points higher to 4,174.08. In Zurich the SMI rose 103 points to 7,310.6.
President Clinton's warning that more healthcare costs will be borne by the tobacco companies had British American Tobacco (BATS) in a spin. The shares tumbled 3 percent to 635 pence.
Otherwise the FTSE was characterized by a recovery in some of the stocks that were heavily sold off Tuesday. British Aerospace (BA.), which has slumped almost 20 percent so far this week, bounced 3 percent to 445 pence, as investors reappraised its huge defense deal with GEC (GEC).
Vodafone (VOD) started to head higher once more, after a bout of profit taking Tuesday. The shares jumped 4 percent in early trade to hit 1,154 pence.
Chemicals giant ICI (ICI) benefited from a broker's upgrade, helping the stock rise 5 percent to 479 pence. Among second-tier companies telecom network Energis (EGS) continued its ascent, rising a further 7 percent to 1,760 pence.
Paris investors just won't give up on the financial stocks. BNP (PBNP) gained a further 4 percent to 80 euros, and CCF (PCCF) rose 3 percent to 81 euros, on hopes of sector consolidation.
Telecom equipment group Alcatel (PCGE) rebounded almost 5 percent to 100 euros, after sliding 8 percent Tuesday.
Defense groups Lagardère (PMMB) and Thomson-CSF (PHO) both moved higher as investors pondered the next move in the consolidation of Europe's defense sector.
In Frankfurt BMW (FBMW), which has been under pressure recently, was in vogue, rising 3 percent to 630 euros. Financial stocks were higher too, and buyers returned to the steel sector, driving Thyssen (FTHY) stock 5 percent higher.
In Zurich investors reacted with relief to the news that engineer ABB had sold out of its Adtranz locomotive joint venture to partner DaimlerChrysler. The $472 million deal boosted ABB shares 5 percent to 1,584.
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