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Records tumble in Europe
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December 23, 1999: 12:56 p.m. ET
Tax-reform proposal triggers 4.5% record rally in Frankfurt; Paris, London glitter
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LONDON (CNNfn) - Europe's biggest markets rallied to record heights Thursday as roaring technology stocks ignited an early "Santa Claus" rally on Wall Street.
Frankfurt surged nearly 4.5 percent as investors belatedly reacted to a German government tax-reform proposal that could free up billions of marks for mergers and restructurings in Europe's largest economy. London, Amsterdam and Paris also set new closing records, prodded higher by buoyant telecom, technology, drug and Internet stocks.
In London, heavyweight telecom stocks led the charge, though thin pre-holiday volume exaggerated share price movements. The benchmark FTSE 100 ended up 48.2 points, or 0.7 percent, at 6,776.8, lifted by a three-digit rally on the Dow Jones industrial average and sharp gains in the high-flying telecom sector. The Dow was up 174 percent, and the Nasdaq had climbed 1.3 percent, when the London market closed.
Market volume was a meager 435 million shares. The FTSE earlier hit an intraday record of 6,801.1, marking its first breach of the 6,800 mark.
The electronic Xetra Dax in Frankfurt tore away from the pack into virgin territory, surging 4.46 percent, or 289.86 points, to 6,782.39, Finance-sector stocks set a blistering pace, with reinsurer Munich Re alone leaping 17 percent.
The CAC 40 in Paris took a cue from the Nasdaq, shattering the 5,700 resistance mark as it closed up just under 2 percent at 5,731.35.
Zurich's SMI advanced 1.3 percent to 7,397.2, while Dutch shares extended a bull run with a sixth straight record close. Amsterdam's AEX index ended up 0.84 percent at 659.11 points, off an intraday high of 663.
In Germany, financial stocks stole the thunder from their blue chip peers. Dresdner Bank (FDRB) soared 11.06 percent, Deutsche Bank (FDBK) stormed up 14.81 percent, HypoVereinsbank gained 8.5 percent and Commerzbank (FCMB) rose 4.7 percent.
Reinsurer Munich Re (FMUV) leapt 16.97 percent, while Allianz (FALV), Germany’s biggest insurer, surged 11.86 percent. The banks’ and insurers’ investment portfolios typically contain large stakes in other German industrial and financial companies.
Deutsche Telekom (FDTE) advanced 2.3 percent amid reports that the planned sale of its cable unit is now back on track.
In Paris, nine blue chips finished at all-time highs as traders wound up their monthly settlements. Among the record setters was data network operator Equant (PEQU), which climbed 6.76 percent after its double-digit gain the previous session. Construction, media and communications company Bouygues (PEN) jumped 5.9 percent amid speculation about a possible bid for its telecom unit.
Recently privatized French bank Crédit Lyonnais catapulted 14.05 percent to the head of the CAC gainers list after being briefly suspended limit-up. Analysts and traders told Reuters the move could be attributed to speculation that either Banque Nationale de Paris or Société Générale may buy shares in Lyonnais. Luxury goods maker and retailer LVMH (PMC) shot up 3.3 percent, bolstered by an upbeat outlook for sales of luxury products in the holiday period.
Air Liquide (PAI) finished 6.8 percent higher on a technical rally.
In London, oil shares moved in divergent directions, with BP Amoco (BPA) up 0.4 percent after settling a dispute over its Russian assets. However, Shell (SHEL) continued its recent weakness, falling 1.1 percent.
Telewest Communications (TWT) reversed an early downturn to end up 1.6 percent amid reports that France’s Vivendi (PEX) may cut its stake in the cable operator. Vodafone AirTouch LSE:VOD] gained 2.86 percent after saying it would not alter the terms of its hostile all-share offer for Germany’s Mannesmann (FMMW), whose stock gained 3.4 percent. Colt Telecom (CTM) gained 3.2 percent.
Among pharmaceutical stocks, Glaxo Wellcome (GLXO) jumped 1.46 percent, while rival SmithKline Beecham (SB) added 1.51 percent.
Shares in Amsterdam also moved into record territory, buoyed by a 2 percent gain, to 96.50 euros, in the former state-owned telecom company Royal KPN. The stock gained from the sale of German cellular operator D Plus to Mobilcom, currently owned by Unicom, a consortium of KPN, Swisscom and Sweden’s Telia. Swisscom shares gained 1.6 percent to 645 Swiss francs.
In Milan, Italian telecom and Internet company Tiscali soared 25 percent to 32.80 euros after initiating its European expansion strategy by snapping up two French telecom firms. The Milan bourse added 1.93 percent to 41,602.
The Federal Reserve’s decision Tuesday to hold interest rates continued to support the yen, which was steady against the dollar at 101.57. The euro climbed back above the $1.01 level to $1.0142. 
-- from staff and wire reports
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