Bourses end hectic week down
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February 26, 1999: 1:50 p.m. ET
European markets take cue from faltering Dow after heavy earnings week
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LONDON (CNNfn) - Europe's equity markets ended broadly lower Friday, capping a harried week dominated by renewed shudders over the strength of the U.S. economy, a rash of big-ticket corporate earnings, and a nasty takeover battle in the Italian telecom sector.
After rocketing 2.5 percent Wednesday to a record high, London's FTSE 100 index of blue chip stocks eased 0.51 percent, or 31.4 points, to close at 6,175.1, its second straight drop.
The decline mirrored weakness on Wall Street, where the Dow drew little sustenance from robust economic data showing the U.S. economy grew at a stronger-than-expected 6.1 percent annualized rate in the fourth quarter.
Testimony by Alan Greenspan earlier in the week, in which the U.S. Federal Reserve Chief called the U.S. economy vibrant but warned that stocks may be overvalued, continued to stalk Europe's markets. The remarks fanned anxiety that the U.S. may move soon to raise interest rates at a time when the monetary debate in Europe centers on when -- and by how much -- to lower rates
Paris blue chips staged the worst performance among major continental bourses, falling 1.44 percent to 4,092.94. Banking giant Société Générale (PGLE) ranked third among the leading gainers on the CAC-40, spiking nearly 2 percent to 133.7 euros amid enthusiasm over the new SG Paribas Group.
Germany's electronically-traded Xetra Dax gave up 0.3 percent to 4,903.96, weighed down by a ratings downgrade for Dresdner Bank (FDRB) after Germany's third-biggest bank reported late Thursday a 7 percent drop in pretax profits in 1998. Dresdner stock dipped 2.9 percent to finish at 31.70 euros.
Dresdner also disclosed 2 billion marks in provisions for losses suffered in Russia and Brazil last year.
Deutsche Bank (FDBK), Germany's largest, shed 0.50 euro to 47.55, while Hypovereinsbank (FBVM) slipped 0.30 euros to 51.60.
Hoechst (FHOE) recouped earlier losses to end up 0.15 euro at 42.95 after the chemicals and pharmaceuticals maker reported pretax profits of 3.1 billion marks, down 3 percent from the previous year. The numbers included one-time gains of 1.3 billion marks from disposals.
Investors in Zurich took a cue from Wall Street, driving shares on the Swiss Market Index down 0.54 percent to 7,063.8. Novartis shed 30 euros to 2,540, while watchmaker Swatch Group gained 50 euros, or more than 5 percent, to 920 a day after posting a 7.5 percent jump in 1998 profit.
The telecom sector provided the most riveting spectacle of the week, as Italy's Olivetti nipped at the corporate coattails of Telecom Italia -- a rival five times its size -- with a $58 billion hostile takeover offer.
Olivetti revised the bid after regulators rejected the initial offer. But Telecom Italia snubbed the renewed bid Friday as "full of holes" amid speculation that it would seek to merge with its 60 percent-owned TIM subsidiary as a way of fending off Olivetti's advances.
Olivetti shares climbed more than 2 percent to 2.8 euros while Telecom Italia shares eased nearly 1 percent to 9.654 euros.
Shares of Volvo, which denied a report in Swedish business daily Dagens Industri that it was about to make a bid for U.S. truck maker Navistar, ended 0.7 percent lower at 212.5 crowns in Stockholm. The report revives speculation from two weeks ago.
British tobacco stocks racked up solid gains after a High Court judge decided to dismiss 46 smoking-related health claims against Imperial Tobacco (IMT) and Gallaher (GLH).
Imperial Tobacco shares gained 2.41 percent to 732-1/4 pence, while Gallaher stock advanced 4.17 percent to 442.9 pence. British American Tobacco (BATS), which wasn't named in the group-action suit, closed up 1.15 percent at 569-1/2 pence.
Shares of British Aerospace fell 5.71 percent to 397 pence after a report in Friday's Wall Street Journal that the aerospace giant is in talks to buy Construcciones Aeronauticas, the Spanish aerospace company that is part of the Airbus Industrie consortium. The report cited people close to the discussions.
-- from staff and wire reports
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