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Bourses rebound on CPI data
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June 16, 1999: 9:18 a.m. ET
European markets reverse early losses as flat inflation numbers attract investors back
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LONDON (CNNfn) - Europe's bourses immediately reversed morning losses Wednesday as nerves over U.S. inflation were calmed by the first flat data since October 1998.
U.S. consumer prices were unchanged in May, below market forecasts, while housing starts rose to an annual rate of 1.68 million units, well above the consensus forecast.
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 resulting 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 toward $1.034.
In London, the FTSE 100 immediately added almost 30 points to reach 6,476.5, up 0.4 percent on the open. Frankfurt's Xetra Dax index jumped 50 points to reach 5,358.24, up 0.25 percent on the day, and the CAC 40 in Paris put on 40 points to reach 4,450.4, a rise of 0.7 percent.
The blue-chip SMI index in Zurich crawled back to its open of 7,060.
Ahead of the CPI data, London had shrugged off better-than-expected U.K. unemployment numbers for May which showed the number of jobless remained at a 19-year low. The market was lifted by a proposed merger between Coca-Cola Beverages (CCB), which bottles soft drinks in central Europe, and Athens-based Hellenic Bottling. After earlier roaring up more than 30 percent, CCB shares retreated slightly, but remained up nearly 29 percent at 148 pence mid-morning in London.
While CCB shrugged off the health concerns after Coca-Cola products in Belgium were recalled, other beverage stocks suffered. Cadbury-Schweppes (CBRY) lost almost 5 percent
In Paris, Elf-Aquitaine (PAQ) 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, pushing Elf shares up 1.5 percent to 145 euros.
Société Générale (PGLE) pared initial losses of more than 2 percent to trade nearly 1.5 percent lower at 183 euros as investors continued to mull the likelihood of success in its bid for Paribas (PPM), which gained almost 3 percent at 118 euros. Banque Nationale de Paris (PBNP) is expected to raise its hostile twin takeover offers for the merging banks after a board meeting later Wednesday.
Cap Gemini (PCAP), Europe's largest IT company, lost more than 4 percent at 134 euros 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) was off 2.6 percent and Hoechst (FCHE) lost 3 percent at 43.36 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. 
-- from staff and wire reports
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