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London hit by cash shift
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February 22, 2000: 1:21 p.m. ET
Surge in Vodafone sees other FTSE blue chips fall; Paris flat, Frankfurt notches up
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LONDON (CNNfn) - London blue chips ended 1 percent lower Tuesday, closing at their second-lowest level so far this year as investors shifted cash out of heavyweight blue chips into Vodafone AirTouch ahead of an expected heavier reweighting Wednesday.
Paris ended flat, while Frankfurt inched up to close off early highs as Wall Street reopened with a stumble after Monday's public holiday. Zurich advanced just over 1 percent, helped by buying interest in big-name issues such as Roche and Nestle.
The leading FTSE 100 index in London ended down 66.9 points, or 1.1 percent, at 6,014.7, wiping out early gains that had carried the index up as much as 91 points. Banking and oil stocks took the worst pummeling as investors cashed out of big blue chips to buy shares in Vodafone AirTouch, whose nearly 10-percent jump added 70 points to the index's upside and helped the FTSE 100 avert a deeper slide into negative territory, below the psychologically significant 6,000 level. The FTSE 100 posted its second-lowest finish of the year since Feb. 15, when it closed at 6,005.2
In Paris, the CAC 40 ended 3.97 points lower at 5,963.31 after a choppy session compounded by Wall Street's failure to bounce back from Friday's losses. The index closed off its intrasession low of 5,920.61. Losers outstripped advancers 21 to 18. The electronically traded Xetra Dax in Frankfurt closed up 0.2 percent at 7,607.94 as a surge in merging utility companies Veba and Viag helped keep the index out of the red.
Among smaller markets, the SMI in Zurich ended up 74.8 points, or 1.1 percent, at 7,037.5, while the AEX exchange in Amsterdam slipped 0.3 percent to 647.28.
The FTSE Eurotop 300, a pan-European gauge that gives a snapshot of regional buying tendencies, gave up just over half a percent to end at 1,523.19. Declines of around 8 percent in the index's forestry and paper, health and mining segments offset gains in telecom and food sub-indexes. The latter was given a lift by an announcement of a major restructuring by Anglo-Dutch Unilever, the world's largest consumer goods company.
In currency markets, the euro stretched its rally above parity with the dollar, which it reached earlier in the day for the first time since Jan. 27, buoyed by speculation of higher interest rates ahead in the 11-nation euro-zone. The euro was quoted around $1.0061 late Tuesday in London, as European bond yields moved lower.
In London, recent market darlings in the banking, media and oil sectors all got broadsided Tuesday. Media and leisure company Pearson (PSON) plummeted 8 percent, music company EMI Group slid 3.2 percent, and pay-TV broadcaster BSkyB (PBSY) tumbled 5.6 percent. Financial stocks did no better, as Royal Bank of Scotland (RBOS) dropped 4.8 percent, Barclays (BARC) shed 5.9 percent, Standard Chartered (STAN) fell 6 percent, and Lloyds TSB (LLOY) tumbled 4.7 percent.
By contrast, Vodafone AirTouch (VOD), the FTSE 100's largest component, roared up 9.5 percent after confirming its had secured 88.9 percent of Germany's Mannesmann, ahead of its expected new FTSE 100 reweighting Wednesday. British Telecommunications (BT-A) shot up 4.1 percent, adding to Monday's strong advance, amid speculation about possible asset sales to boost a share price that has fallen by a third this year.
Unilever PLC (ULVR), the U.K.-based co-owner of consumer-goods maker Unilever, rose 1.5 percent in London and Dutch-listed Unilever NV gained 3.6 percent in Amsterdam after the company said it would slash 25,000 jobs, about 10 percent of its workforce, over the next five years. The program aims to boost profit and pep up the image of a company whose sales and earnings increases have lagged the more eye-catching growth of such industries as telecommunications and computer technology.
Oil price drop depresses energy giants
The FTSE 100 index also was pulled down by a 4.9 percent decline in oil and gas producer Shell Transport & Trading (SHEL) while rival BP Amoco (BPA) lost 3.5 percent as London Brent crude oil prices slid to more than $1 below the peak they hit a week ago. Mining company Billiton LSE:BLT] shed 10.2 percent and rival Rio Tinto (RTO) fell 5.6 percent, as cyclical, or economically-sensitive stocks took a beating.
In Frankfurt, merging utilities Viag (FVIA) and Veba (FVEB) both surged 11 percent after Veba said it had successfully transmitted data using its power lines, in a pilot test. Lufthansa (FLHO) jumped almost 5 percent before an expected announcement that it would merge its air cargo unit with that of Deutsche Post and DHL to create the world's second-largest airfreight operator after Federal Express.
HypoVereinsbank (FHVM) gained 2.1 percent, well off earlier highs, as it predicted an improvement in earnings this year. Germany' second-largest listed bank Tuesday announced a 43 percent slide in 1999 net earnings. Deutsche Bank (FDBK) advanced 4.3 percent, building on gains Monday after saying it is prepared to invest heavily in a new e-commerce initiative. But Deutsche Telekom (FDTE) slid 2.2 percent after announcing the sale of a cable-TV unit to U.S. private-equity investor Callahan Associates.
E-commerce optimism triggers gain
In Paris, retailer Pinault-Printemps Redoute ended 4.8 percent higher after the head of the company's e-business unit talked up the potential of its Internet sales in an interview with a French newspaper.
Pay-TV operator Canal Plus (PCAN) was down 5.8 percent, reversing earlier gains and adding to its recent declines.
Conglomerate Lagardère (PMMB) advanced 1.8 percent. The CAC also was weakened by a 4.3 percent fall in defense group Aérospatiale-Matra. Drugmaker Sanofi-Synthelabo (PSQ) fell 1.2 percent even after posting a 26 percent jump in 1999 net profits excluding one-time capital gains, in its first earnings report since Sanofi merged with Synthelabo.
In Helsinki, Stora Enso stock slid 15.3 percent, as investors gave a thumbs-down to the Swedish-Finnish paper maker's acquisition of U.S. rival Consolidated Papers (CDP: Research, Estimates) for 4.9 billion euros in cash, stock and assumed debt. 
-- from staff and wire reports
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