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Bourses leap into black
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June 16, 1999: 1:12 p.m. ET
Europe's markets jump on subdued U.S. inflation data; Paris sets closing record
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LONDON (CNNfn) - Overcoming early weakness Wednesday, London blue chips ended at a six-week high while Paris stocks set a new closing record. The gains followed days of hand wringing after European traders got a welcome confidence boost in the form of subdued U.S. inflation figures that took some of the edge off their persistent interest rate fears.
In a nearly uniform pattern, European markets roused themselves from early-session doldrums following the release of weaker-than-expected U.S. consumer price data.
The data eased fears, rampant throughout Europe this week, that the Federal Reserve is priming for a an interest rate hike that could tighten the spigot on credit.
Ahead of the CPI data, London had shrugged off better-than-expected U.K. unemployment figures for May that showed the number of jobless remained at a 19-year low.
Britain's benchmark FTSE 100 advanced 0.8 percent, or 53.7 points, to 6,504.9 on the strength of a triple-digit surge in the Dow Jones industrial average. The bank sector accounted for 32 points of the blue chip advance.
In Frankfurt, the electronic Xetra Dax clambered back into the plus column, ending up 37.75 points, or 0.7 percent, at 5,382.67 after U.S. consumer prices in May were reported as holding steady after April's 0.7 percent gain, soothing fears of higher borrowing costs. The figures buoyed U.S. bond prices and sent the Dow soaring more than 100 points in early trade.
The U.S. data sent Paris stocks on the CAC 40 index roaring up 1.4 percent, or 63.57 points, to end at 4,481.75, elbowing past the previous closing record of 4,442.84, set on May 3. Zurich's SMI advanced 0.6 percent to 7,103.1. Volume on the CAC 40 was 2.17 billion euros.
European markets spent the morning in negative territory ahead of the inflation data with low volume shading some positive corporate news. Investors feared a repeat of April's strong numbers, prompting a rise in U.S. interest rates at the end of the month and a their effect on European exports.
Currency traders caught the nervous mood before the U.S. CPI and industrial production numbers, taking the euro below $1.04 for the first time in a week. The morning slide continued as the single currency drifted towards $1.034.
Oil stocks performed especially well amid a jump in crude oil prices to a 17-month high triggered by firmer demand and market optimism about OPEC's compliance with recent cutback pledges.
In London, BP Amoco [LSE:BPA} added almost 0.8 percent to close at 1,196 pence, while French heavyweights Total (PFP) and Elf-Aquitaine (PAQ) gained 3.6 percent and 2.5 percent, respectively. The latter two also benefited from speculation that they may be contemplating a merger. The speculation was played down by analysts, however.
Separately, Elf extended its bid to take over Norwegian oil firm Saga Petroleum in the wake of a state-backed bid from Norsk Hydro and Statoil. However, investors welcomed its decision to lengthen the acceptance period rather than boost the value of the offer.
Early in the session, London traders shrugged off stronger-than-expected U.K. jobless data for May showing unemployment remaining at a 19-year low.
On the mid-cap FTSE 250 index, Coca-Cola Beverages (CCB), which bottles soft drinks in central Europe, rocketed up nearly 27 percent to close at 152 pence after unveiling plans to merge with Athens-based Hellenic Bottling in a 1.9 billion pound ($3.0 billion) stock swap. At one point, CCB shares had been up more than 30 percent.
CCB managed to emerge unscathed from Belgium's earlier decision to recall Coca-Cola products from store shelves after a group of schoolchildren fell ill after drinking a tainted batch of Coke drinks. In the wake of that decision, several other countries banned sales of Coke products.
Spearheading the FTSE 100 decliners, Cadbury-Schweppes (CBRY) lost 6.5 percent in London, to close at 415 pence, after broker ABN Amro trimmed the company's earnings estimates.
On the opposite end of the performance spectrum, Railtrack (RTK) leapt 7.1 percent to 1,435 pence, following the U.K. government's decision Tuesday to offer the firm the opportunity to link its overland rail networks to London's metro system.
Société Générale (PGLE) slipped 1.5 percent as investors continued to mull the likelihood of success in its bid for Paribas (PPM), which gained 2.1 percent. Both stocks had been suspended Tuesday after SocGen sweetened its bid for Paribas.
Banque Nationale de Paris (PBNP) closed up 0.6 percent at 84.50 euros after saying Wednesday it intended to wait for regulators to issue a ruling on the SocGen offer before revealing its further intentions.
Cap Gemini (PCAP), Europe's largest IT company, lost more than 2.3 percent as arbitrageurs moved in after the company announced plans for a public listing of its Dutch subsidiary.
In Frankfurt, expected changes in the Dax index drove some stocks down. Lufthansa (FLHA) finished down almost 3 percent and Hoechst (FCHE) lost roughly 2 percent on speculation that both would drop out of the leading market index. The airline also lost ground after its annual shareholder meeting was told that earnings were under pressure.
A general malaise stalked Europe's currency markets before the U.S. CPI and industrial production numbers were released, pushing the euro below $1.04 for the first time in a week. By late day in Europe, the euro was hovering just above $1.03. 
-- from staff and wire reports
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