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Bourses aren't inspired
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March 10, 1999: 1:41 p.m. ET
London stages late rally to join Paris just in black, but Frankfurt is stuck in mire
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LONDON (CNNfn) - European bourses struggled to make headway Wednesday, with buoyant banking stocks helping to stave off worse declines. Paris held on in positive territory throughout the session, while London staged a late rally leaving Frankfurt as the big loser.
The somber tone in Europe's main markets was lifted by the stunning late-night bid by France's BNP for two rival domestic banks.
In Germany, however, even the prospect of more consolidation in the financial sector could not do enough to dispel the gloom. General economic worries kept a lid on buying, although the impending corporate tax changes took center stage.
The electronically-traded Xetra Dax closed 1.26 percent lower at 4,730.05, more than reversing any of the initial gains in early trading. This was despite strong buying of banking stocks. Dresdner Bank (FDRB) was the biggest gainer, ending the day 5.5 percent up at 33.10 euros. Elsewhere in the banking sector, Hypovereinsbank was up 2 euros at 54.00, while Deutsche Bank (FDBK) rose 2 percent to close at 47.52 euros.
One of the biggest declines of the session was auto giant DaimlerChrysler. The shares closed more than 3 percent lower at 80.00 euros, after the group said it had ended all talks on taking an equity stake in either Nissan Motor Co. or the Japanese group's commercial vehicle subsidiary.
Nissan has said it will now pursue other tie-ups and confirmed a link with French car maker Renault (PRNO) was still an option. Renault's shares slumped 2.6 percent to 36.62 euros in Paris.
Back in Germany, another car maker, BMW (FBMW), failed to impress, despite encouraging comments late Tuesday over the future of its Rover subsidiary. The shares ended almost 20 euros lower at 605.10.
Late buying in London rescued the world's second-largest stock market from ending in the red, with the FTSE 100 index of leading shares closing just 3.8 points higher at 6,241.5.
The positive glow from Tuesday's budget all but evaporated, with banking shares again responsible for keeping the index from going under.
BNP's hostile bid pushed the shares in most bank stocks higher. Alliance & Leicester (AL) finished the strongest with a rise of over 5 percent to 840 pence. Abbey National (ANL) was close behind with a rise of 4.75 percent to 1,324 pence. NatWest Bank (NWB) was up strongly, closing 4.43 percent higher at 1,364 pence. London's largest bank, Lloyds TSB (LLOY), was up 2.67 percent at 933.5 pence.
Some of the drinks and brewing stocks benefited from a surprisingly benign budget. Brewing and leisure giant Bass (BASS) soared 4 percent to close at 1,766 pence. One of the world's largest liquor groups Allied Domecq (ALLD) put on 3.18 percent to close at 488 pence.
Tobacco stocks were down sharply, in contrast, following British American Tobacco's warning Tuesday of difficult trading conditions. The budget also lumped extra duty on cigarettes. Ironically, BAT (BATS) suffered the least, losing 1.5 percent to close at 552 pence. Imperial Tobacco (IMT) was the biggest loser, ending 5.71 percent down at 672-1/2 pence. Gallaher (GLH) shed 5.37 percent to close at 392 pence. Selling pressure increased after it was announced that the tobacco giant was set to lose its blue-chip status later this month.
Three other companies are also set to lose their blue-chip status from March 20 -- supermarket group, Safeway (SFW), security firm Williams (WLMS) and conglomerate Tomkins(TOMK).
The four will be replaced by recent arrival, South African Breweries, telecom network provider Energis (EGS), publisher EMAP (EMA) and software group Misys (MSY).
Media groups had a rough day. Pearson's (PSON) shares slumped almost 6 percent to close at 1,380 pence, after the owner of the Financial Times newspaper disappointed with a 19 percent rise in net profit to 389 million pounds. The biggest blue chip decline of the day was Reuters (RTR), which shed almost 7.5 percent to 907 pence.
In Paris, the CAC 40 held on to its gains during the session to close marginally up at 4,162.31, a rise of 2.5 points. This rise came despite the fact that the three index heavyweights involved in the $37 billion bank bid had their shares suspended. There was no trading in the shares of BNP, Société Générale or Paribas.
In Switzerland, the SMI index ended the day almost 1 percent lower, closing down 58 points at 7,209.4.
-- from staff and wire reports
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