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Bourses boosted by Dow
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June 30, 1999: 5:34 a.m. ET
A three-digit rally on Wall Street inspires European stocks ahead of rate decision
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LONDON (CNNfn) - European stocks Wednesday fed off a three-digit overnight rally on Wall Street, with major bourses posting healthy gains ahead of a crucial decision on U.S. interest rates.
European stock markets rose in line with Wall Street's strong showing in early trading Wednesday, posting healthy gains ahead of the U.S. interest rate decision, due after European trading ends. Traders have factored in a quarter-percentage-point rate hike, though worries remained that the Fed action could prove more stringent.
In London, the FTSE 100 advanced 42 points, or 0.67 percent, to 6,349.6 in a repeat of Tuesday's early rally that later fizzled amid Fed-induced jitters. Rate-sensitive bank stocks, which took a hit Tuesday, were tentatively firmer Wednesday after the confidence boosting run-up on the Dow Jones industrial average overnight.
The CAC 40 in Paris gained 21 points to 4,524.87, helped by a drop in the country's May unemployment rate from 11.4 percent to 11.3 percent.
Germany's Xetra Dax extended its early advance to trade up 44 points. or 0.8 percent, at 5,403.50. In Zurich, the SMI index was up 27 points, at 7,034.4, a gain of 0.4 percent.
The FTSE Eurotop 300 of the largest pan-European shares crept up 4.76 points, or 0.4 percent, to 1,316.54.
Bourses took encouragement from the strong session on Wall Street overnight. The Dow Jones industrial average rose 160.20 points, or 1.5 percent, to end at 10,815.35. The Nasdaq composite gained 39.67 points, or more than 1.5 percent, to end the day at 2,642.11 and the S&P 500 index rose 20.10, or 1.5 percent, to 1,351.45.
European markets received little encouragement of a continuing rally on Wall Street. S&P 500 index futures on the Globex trading system were down 0.80 at 1,355.90. Fair value for the futures contract - taking account of dividend payments and interest costs - was calculated at 1,355.80.
London was boosted by the performance of its heavyweight drug stocks, with SmithKline Beecham (SB) up 2.3 percent and Glaxo (GLXO) adding 2.2 percent.
Cellular phone operator Vodafone (VOD) dipped 0.6 percent to 1,261 pence on the first trading day for the enlarged entity after the company completed its takeover of U.S. counterpart AirTouch.
Anglo-French Eurotunnel (PTNU) was unchanged in Paris after the cross-Channel tunnel operator said Wednesday the French parliament had extended its concession through 2086. The company must pay the French and British governments 59 percent of its pretax annual earnings from 2052.
In Paris, Banque National de Paris (PBNP) added 2 percent, stretching an early rally, despite the breakdown of Bank of France-sponsored talks in BNP's hostile bid to take over Paribas (PPM) and Société Générale (PGLE). Paribas shares leapt 2.6 percent, to 110.0 euros, while SocGen stock rallied 3.8 percent, to 172.1 euros.
France Telecom (PFTE) stock was off 0.7 percent despite the company's announcement that it plans to shave costs for fixed-line calls by 20 percent from July 1. Suez Lyonnaise (PLY) rose 2.5 percent on the back of its previously announcement acquisition of U.S. water treatment company Nalco.
Banking stocks lifted the DAX in Frankfurt, with Deutsche Bank (FDBK) adding 1.9 percent, and Commerzbank (FCBK) climbing 1.4 percent. Dresdner Bank (FDRB) was up nearly 3 percent at 37.75 euros.
Among German mid-caps, Fresenius Medical Care (FFME) backed off some early gains but remained up 12 percent at 57.00 euros after announcing plans to list an additional proportion of its capital, a move which could take it into the benchmark DAX 30 index.
Financials also made progress in Zurich, with Credit Suisse adding 1.3 percent and UBS climbing 0.6 percent.
In the currency markets, the euro traded around $1.0320 in early European action.
-- from staff and wire reports
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