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Europe ends losing streak
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July 27, 1999: 12:39 p.m. ET
Bourses weather late selling to advance as deals lure investors in thin trading
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LONDON (CNNfn) - European stocks flagged in afternoon trading Tuesday, but London held on to strong early gains to break a week-long losing streak while Frankfurt and Paris also finished ahead.
The main bourses had looked set to shake off their recent losses, though traders had warned that thin buying left markets vulnerable to a late sell-off if Wall Street dropped later. In fact, the European sell-off came despite a rally in U.S. markets led by the technology sector.
London continued to trade on the back of an early deal-driven advance, and the benchmark FTSE 100 recouped its Monday loss, the seventh straight decline. The index, which has never fallen for seven sessions in a row, closed up 93.7 points at 6,262.8, a gain of 1.52 percent, after peaking at 6,281.7.
The Xetra Dax in Frankfurt worked through a volatile spell to continue its upward path after a 2 percent drop Monday. However, the index slid back after peaking at 5,253.11, and closed up 18 points at 5,224.16, a gain of 0.34 percent.
The CAC 40 in Paris made a stronger showing after seven straight session losses, reaching 4,433.93 before dipping a little to close up 15 points at 4,426.12, a gain of 0.56 percent.
The SMI in Zurich, which fell heavily Monday, recouped 88 points to 6,817.9, up 1.3 percent, having reached 6,839.6 in midday trading.
All of the other main European exchanges ended the day in the black except the Ibex in Madrid, which shed 1 percent.
The FTSE Eurotop 300 of the largest pan-European companies advanced 11 points to 1,273.65, buoyed by a 4 percent gain in steel stocks and strong rebounds in the drug and telecom sectors.
London cleans up
London's advance included technical corrections to its recent slide and the glow from two more big deals, including one in the telecom sector.
The largest advance was from cleaning products group Reckitt & Coleman (RCOL), which soared 12.1 percent to 777 pence after unveiling a $7.7 billion merger with Dutch-based Benckiser to create the world's largest household cleanser group. Benckiser added 3.1 percent to 54.60 euros after peaking at 55.55.
British Telecommunications (BT.) jumped 6.18 percent to 1,050 pence after buying the 40 percent of BT Cellnet, the U.K.'s number two cellular operator, from Securicor (SCR) for $5 billion. Securicor was up 7.44 percent, having been up 9 percent at one point.
The FTSE also was lifted by the first rise in manufacturing business confidence for almost two years. The Confederation of British Industry's quarterly industrial trends survey registered a positive balance of 5 percent about future trends compared with a 6 percent negative balance in the first quarter of the year, though companies remained cautious about export prospects.
Barclays (BARC), Britain's second-largest bank, gained more than 5 percent at 1,775 pence after ending its 9-month search for a new chief executive, naming Bank of Montreal executive Matthew Barrett to the post.
Halifax (HFX), Britain's biggest mortgage bank, was among the third of stocks that fell as it reported a 20 percent drop in pre-tax profits and warned of pressure on margins despite the booming housing market. The shares lost almost 2 percent at 705 pence.
Bank of Scotland (BSCT) continued to enjoy the profits from a series of analysts' upgrades, climbing 3.29 percent to 780 pence. NatWest Bank (NWB) enjoyed similar fortune, advancing 2.1 percent, and Lloyds Bank (LLOY) rose by 3.6 percent.
Market heavyweights that have suffered from fears of higher interest rates in their key U.S. markets enjoyed rebounding fortunes, notably drug maker Glaxo Welcome (GLXO), which added 4.3 percent.
Cable & Wireless (CW.) continued to reap the gains from its double-deal Monday to reorganize its cable business and ownership of Cable & Wireless Communications, advancing 3.49 percent to 771 pence.
The long-running battle for the pub business of beverage group Allied Domecq (ALLD) lifted its shares 3.1 percent after a court ruled that a bid from Punch Taverns is legal. Brewer Bass [LSAE:BASS], also tied in to the Punch offer, gained 3.5 percent, though Allied is reviewing at least one other rival offer.
Outside the FTSE 100, Internet provider Freeserve (FRE) succumbed to more profit taking after its IPO Monday, shedding almost 4 percent at 195 pence, though staying well above its 150 pence launch price.
The decision by Britain's industry regulator to cut prices by 14 percent in 2000 focused selling activity on utilities. Thames Water (TW), which will incur a price reduction of 11.7 percent, was down 3.5 percent while Severn Trent (SVT), added 0.22 percent after a positive review and United Utilities (UU) lost 0.31 percent.
Continental bourses hang on
In Paris, France's Vivendi (PEX), with extensive U.K. water assets, was up 0.74 percent despite a series of downgrades as analysts weighed up the cost of its recent acquisition spree, though the CAC overall was split between risers and fallers. Suez-Lyonnais des Eaux, (PLY), another player in the U.K. market, lost 1.1 percent.
Retailer Pinault-Printemps Redoubt [PAR;PSKE] added 2.21 percent after reporting a 13.9 percent jump in first-half sales. The news helped lift other retailers, with supermarket group Carrefour (PCA) gaining 2.2 percent, though Casino [PCA:PCK] lost early gains to close down 0.3 percent.
Auto stocks took a hit from a sector re-rating, with tire maker Michelin (PMI) down 3.6 percent -- the biggest drop on the CAC -- and Renault (PRNO) down 0.7 percent despite an early gain after good results from its Japanese partner Nissan.
Frankfurt advanced on strong bank stocks and rising retail shares as the summer sale season started. However, HypoVereinsbank, Germany's second-largest bank, gave up a 3 percent rise and closed down 2.7 percent at 56 euros after a 14.3 percent rise in first-half operating profit failed to thrill investors.
Other banks, due to report this week, gained on a brighter outlook for corporate business. Dresdner Bank (FDRB) rose 1.8 percent and Commerzbank (FCCW) jumped 1.9 percent. Market heavyweight Deutsche Bank {FSE:FDBK] added 1.8 percent.
Retailers have been punished in recent weeks, but market leader Metro (FMEO) and second-place Karstadt (FKAR) both added 2.7 percent as investors re-rated the sector.
Auto stocks also came in for correction. Volkswagen (FVOW) advanced 1.8 percent after reporting a modest 1.4 percent rise in first half profits. BMW (FBMW) climbed 3 percent. 
-- from staff and wire reports
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