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Bourses end off early highs
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April 9, 1999: 1:33 p.m. ET
Europe trims gains at close as rate-cut euphoria ebbs; FTSE shy of new record
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LONDON (CNNfn) - New storm clouds over Kosovo and profit-taking on Wall Street sapped some strength from European bourses late Friday, but most markets closed solidly in the black a day after the European Central Bank cut its key lending rate by half a percentage point.
In a pattern mimicked across several markets, positive starts spurred by the rate cut gave way to nervousness as the Dow stumbled early and amid reports that Russia had ordered its strategic missiles to be aimed at countries participating in the bombardment of Serbia.
London's FTSE 100 closed 0.54 percent, or 34.9 points, higher at 6,472.8, just shy of its record closing high set Wednesday. Earlier in the session, the benchmark index had breached the psychologically significant 6,500 barrier for the first time, marking its third intraday high of the week.
The FTSE 100 had slipped nearly 1 percent Thursday as investors reacted with a shrug to the Bank of England's own decision to lower its rate by a quarter percentage point, to 5.25 percent.
After climbing more than 2 percent in the morning as investors applauded the ECB rate cut, Frankfurt's electronically traded Xetra Dax pared some of its early gains but still closed up 1.3 percent, or 66.16 points, at 5,133.92.
In Paris, exuberance over Friday's half-percentage-point rate cut petered out late in the trading session Friday as slippage on the Dow and fresh tensions in Kosovo weighed on the CAC 40 blue chip index.
The benchmark index ended up 0.75 percent at 4,363.14, yet below a lifetime high of 4,416 set earlier in the day as political uncertainty in Kosovo helped temper buying enthusiasm.
Swiss shares climbed 0.74 percent to 7,386.9 a day after the Swiss National Bank cut its own discount rate 0.5 percentage point to a historical low of 0.5 percent.
In Frankfurt, chemical stocks were thrust into the limelight, posting impressive performances as the European Central Bank's 0.5 percent rate reduction enticed investors to those companies' relatively high yields.
The most heavily traded stock on the electronic Dax, BASF, (FBAS) jumped 6.78 percent to 38.90 euros. Bayer (FBAY) advanced 3.44 percent to 37.60 euros, while Degussa Huels (FDGS) gained 4.53 percent to 35.50 euros.
Financial stocks continued to benefit from sector-wide expansion talk. Shares of Germany's third-largest bank, Dresdner Bank (FDRS) rose nearly 3 percent to 38.53 euros after the bank reported a 55.4 percent leap in 1998 net profit to 1.858 billion marks ($1.03 billion).
Dresdner also said it may seek to boost its core capital by 2.8 billion marks as it looks ahead to some major acquisitions in Europe. The company's chief executive said banking consolidation in France and Italy raise further possibilities for expansion in the euro-zone.
In Zurich, CS Group shares jumped nearly 3 percent to 294.50 francs after it unveiled plans to launch an Internet stock-trading service April 12.
Consolidation among financial institutions was also back on the agenda after the Wall Street Journal reported Friday that Société Générale (PGLE) is eyeing a European partner to join its planned merger with Paribas (PPM). A partner would help ward off the unwanted attentions of French rival Banque Nationale de Paris (PBNP).
SocGen ended up 0.24 percent, while BNP shares spiked 4.06 percent.
Renault (PRNO) shares also were in focus after a Japanese newspaper reported the French carmaker had estimated the total debt of its prospective partner Nissan was higher than expected, at $33.8 billion. Renault stock closed up more than 3 percent at 33.70 euros.
Bank of France Governor Jean-Claude Trichet said Friday there should be "no new expectations" of a further monetary easing by the ECB following the half-percentage point reduction.
On the media front, the British government said Friday it had blocked a bid by pay-T.V. giant BSkyB to buy English soccer club Manchester United. The British trade secretary said the deal would operate against the public interest.
BSkyB (BSY) closed unchanged at 541 pence in London; Manchester United (MNU) stock plunged 14.65 percent to 188 pence.
-- from staff and wire reports
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