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Markets & Stocks
Europe heads for the exits
July 29, 1999: 12:45 p.m. ET

Selling leaves bourses down sharply; London off 3 %, Frankfurt even more
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LONDON (CNNfn) - European markets succumbed to some of the heaviest selling of the year Thursday, with a 2 percent drop across the board even before Wall Street's opening tumble.
     The FTSE 100 slid 179.7 points or 2.85 percent, to 6,117.5 on heavy volume, weighed down by telecom, banking and pharmaceutical heavyweights.
     The Xetra Dax in Frankfurt suffered a dramatic 177 point fall to 5,052.32, well below expected levels of technical support. The 3.39 percent drop was driven by selling pressures after heavyweights DaimlerChrysler and Deutsche Telekom posted disappointing second-quarter earnings.
     Analysts set new floors of between 4,600 and 5,000 for the index, though many believed most pent-up selling pressure had been spent.
     The CAC 40 in Paris closed down 122.31 points at 4,298.83, five points off its low for the day. the 2.93 percent drop reflected across-the-board selling.
     The SMI in Zurich was a little firmer but still closed down 115.6 points, or 1.69 percent, at 6,713.6. Amsterdam, Madrid and Milan also fell heavily.
     The FTSE Eurotop 300 of the largest pan-European shares fell 2.35 percent to 1,250.26, reflecting the heavy selling pressure across all sectors.
     The slide on Wall Street was prompted by a 1.1 percent jump in labor costs in June, though second quarter GDP data slowed to 3.3 percent after the 4.3 percent first quarter surge.
    

     The euro benefited from the relative slowdown in the U.S. economy and a larger-than-expected rise in the French Insee business confidence index for June. The single currency topped out at $1.0728
    

     The London market was dominated by a slide in telecom and drug stocks, with the latter dominated by an 11.4 percent collapse in Glaxo Wellcome (GLXO) to 1,559 pence. The company delivered first-quarter profits in line with expectations but warned it won't meet its double-digit target for sales and earnings growth for the full year.
     SmithKline Beecham (SB) also was punished but recovered a little from its low to end at 737 pence, a loss of 4.91 percent. Both stocks climbed Wednesday after receiving product approvals from regulators.
     Investors also were hung up on disappointing first-half results from British Telecommunications (BT.). Pre-tax profits rose to 772 million pounds ($1.23 billion) versus an expected 810 million, and the shares gave up 4.42 percent to 1,130 pence after being down almost 5 percent at one point.
     Cable & Wireless (CW.) was off 3.19 percent at 762 pence amid reports that it was close to selling its interest in cellular operator One2One to Deutsche Telekom for what was seen as a knock-down price.
     Other cellulars fell back, with Vodafone (VOD) down 3.27 percent at 1,269 pence and Orange (ORA) off 4.86 percent at 960 pence.
     British Airways (BAY) ended down 1.18 percent at 398 pence as it reiterated its plans to press ahead with an alliance with American Airlines (AMR).despite regulatory hurdles.
     Prudential (PRU) was one of the few gainers despite a 27 percent fall in first-quarter net profits to 272 million pounds ($432 million). Britain's largest insurance firm cited provisions for its new direct banking service, Egg.
     However, the stock was marked up 1.7 percent at 865 pence, as Egg has captured around 25 percent of new bank savings in the United Kingdom since its launch.
     Other banks fell back sharply, with Lloyds (LLOY) down 4.7 percent at 788 pence and NatWest (NWB) off 5.25 percent at 1,172 pence.
     Drinks group Allied Domecq (ALLD) had a rollercoaster morning, trading up almost 7 percent only to slide back to up just 0.2 percent at 561 pence. Investors mulled the possibility that a counterbid for Allied's pubs business may emerge to match that from Punch Taverns.
     Reckitt & Coleman (RCOL) posted the largest rise of the day, up 4.7 percent to 861 pence, amid speculation of a counter bid for the detergent group, which plans to merge with Dutch-based Benckiser.
     Frankfurt was pulled back by the loss of support provided in recent sessions by banking and auto stocks as investors reacted to disappointing earnings news.
     DaimlerChrysler gave up 6 euros, or 7.5 percent, to close at 74 euros after the automaker posted a 6.6 percent rise in second- quarter net profits, well below analysts' expectations.
     Deutsche Telekom (FDTK) lost heavily on the back of a possible One2One bid and a 5 percent fall in second-half profits as domestic competition in long-distance markets started to bite. Its shares fell 1.40 euros to end the day at 37 euros, a drop of 3.6 percent.
     Commerzbank (FCBK) was off 3 percent despite a 4.9 percent rise in first-half profits as analysts expressed concern about cost growth. Dresdner Bank (FDRB) lost 5.2 percent.
     BMW (FBMW) was among the handful of risers, gaining 1.8 percent to 702 euros after the automaker received an earnings upgrade from Lehman Brothers.
     Telecoms also weighed down the CAC in Paris, with Equant, which provides international data communications services, down 8.9 percent after posting a first-half operating loss.
     France Telecom (PFTE) lost 3.38 percent, with traders pointing to the slides at Telekom and Britain's BT.
    

     Oil firm Elf Aquitaine (PAQ) lost a 1 percent gain to slide 2.2 percent to 155 euros after its counter bid for TotalFina was approved by the French market regulator. The authorities said the bid would close after TotalFina's own hostile offer. TotalFina lost 2.5 percent to 115.9 euros.
     In the latest twist in the other big French bid battle, Société Générale (PGLE) jumped 4.98 percent to 173 euros after strong first-half results and a statement from U.K. insurer CGU (CGU) that it may increase its stake in the bank from 3 to 5 percent. CGU shares lost 4.48 percent at 861 pence.
     SocGen merger partner Paribas (PPF) added 1.18 percent to 102.6 euros while Banque Nationale de Paris' (PBNP), which has made a hostile bid for both, advanced 4.11 percent to 76 euros. Back to top
     -- from staff and wire reports

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.