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Bourses resist Dow losses
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June 30, 1999: 1:10 p.m. ET
Major markets end higher, helped by banks; hesitant investors await Fed
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LONDON (CNNfn) - Shares in London, Frankfurt and Paris finished firmer Wednesday - aided by some strong performances by bank issues -- in quiet trading ahead of a key U.S. rate decision by the Federal Reserve.
The Fed was expected to issue its rate ruling after markets closed in Europe Wednesday.
The benchmark FTSE 100 closed a cautious 0.18 percent higher, at 6,318.5, a gain of 11.4 points, as a weak start for the Dow Jones industrials weighed on sentiment, helping to wipe out an earlier rally of more than 50 points. Pharmaceutical powerhouses SmithKline Beecham (SB) and Glaxo (GLXO) accounted for all of the FTSE 100's gains; Glaxo added 2.5 percent, while SmithKline jumped 1.8 percent.
The FTSE 100 ended the second quarter 23.2 points higher, compared with a 413-point advance in the first quarter.
In Frankfurt, the electronic Xetra Dax finished up 0.35 percent, or 18.99 points, at 5,378.52 after a day of restrained activity ahead of the Federal Reserve's rate decision.
Banking stocks led the advancers after Goldman Sachs raised its earnings-per-share forecast for Dax component Deutsche Bank (FDBK) by seven percent, Dresdner Bank (FDRB) by six percent and Commerzbank (FCBK) by three percent.
Deutsche Bank shares added 0.94 percent, Dresdner stock climbed 3.97 percent and Commerzbank added 0.82 percent.
A similarly strong performance by financial stocks underpinned a rally on the Paris bourse, where shares on the blue-chip CAC 40 finished 0.73 percent higher at 4,536.61.
Zurich's SMI was among the markets finishing in the red, shedding 1.4 percent to 6,908.9 due to rate jitters and position-squaring at the end of the second quarter.
Leading indexes in Amsterdam, Italy and Spain all closed lower.
Cellular phone operator Vodafone (VOD) dipped 1.5 percent to 1,255 pence on the first trading day for the enlarged entity after the company completed its takeover of U.S. counterpart AirTouch. Traders said the impact of its enlarged weighting had been oversold.
Leisure group Whitbread (WTB) lost 3.53 percent to close at 991 pence after saying it intended to sweeten its bid for the pub assets of Allied Domecq (ALLD) in the face of fierce competition from Punch Taverns. Punch recently raised its all-cash bid for Allied by 150 million pounds to 2.85 billion pounds ($4.49 billion).
Brewer Bass (BASS), which stands to gain Allied assets from a Punch victory, jumped 4.78 percent, leading the gainers on the FTSE 100.
The last day of duty-free shopping for intra-European travelers saw airport operator BAA (BA) lose 2.4 percent, to 611 pence, while ferry operator P&O (PO) shed 4 percent. Both will lose revenue from the ban.
Anglo-French Eurotunnel (PTNU) ended unchanged in Paris, at 1.43 euros, 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, the breakdown of talks among banks involved in a three-way bidding battle drove up their share prices as investors banked on hopes the banks would become ripe for takeovers.
Banque National de Paris (PBNP) added 3 percent to 80.80 euros, while its targets, Paribas (PPM) and Société Générale (PGLE), advanced 1.4 percent and 3 percent, respectively.
The star performer in Paris was engineering giant Alcatel (PCGE), which jumped 4.2 percent to136.5 euros after securing a $1.5 billion fiber-optic contract.
France Telecom (PFTE) stock ended down 1.35 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 2.46 percent on the back of its previously announced acquisition of U.S. water treatment company Nalco.
In Amsterdam, shares of Philips Electronics hit a lifetime high Wednesday of 97.10 euros after the chief of the company's consumer electronics division made positive comments about Philips' PCC telecom subsidiary. The stock receded off the high later in the session to close up 0.1 percent.
In Frankfurt, air carrier Lufthansa (FLHA) gave up 1.12 percent as traders fretted the airline may lose its spot on the Euro STOXX 50 index. The company has also signaled it may lower its earnings outlook for 1999 unless market conditions picked up.
Among German mid-caps, dialysis services firm Fresensius Medical Care surged 13.42 percent after announcing its parent may list 50.3 percent of its common share capital, a possible prelude to a blue-chip DAX listing.
-- from staff and wire reports
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