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Europe closes flat
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May 31, 2001: 12:16 p.m. ET
Investors seek defensive stocks, hunt for bargains on the Nasdaq
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LONDON (CNN) - Europe's major bourses stabilised on Thursday after the previous day's falls, with Wall Street starting perkier and defensive stocks in favour.
Frankfurt's electronically traded Xetra Dax rose 1.2 percent in late trading to 6,111.36, boosted by the performance of financial stocks.
Allianz (ALZ), Europe's second-biggest insurer, rose 4 percent after saying it expects cost and income synergies from the merger with Dresdner Bank, Germany's No. 3 bank, of more than  1 billion by 2006.
Dresdner (FDRB) rose 2.8 percent, rival HypoVereinsbank (FHUV) gained 2 percent, and reinsurer Munich Re (FMUV) added 3 percent. Both HypoVereinsbank and Munich will benefit from the Allianz deal as the financial giants unwind cross-shareholdings.
London's FTSE 100 closed virtually unchanged at 5,796.1, as pest control and hygiene services company Rentokil Initial (RTO) surged 12.9 percent after its statement that trading in the first four months of the year was ahead of expectations.
In Paris, the CAC 40 blue chip index gained 0.2 percent to reach 5,454.19, with "old economy" stocks, which are seen as resilient to a slowdown in economic growth in the U.S. and Europe, adding to the market's upside. Building materials company Lafarge (PLG) showed the biggest gain, up 5.2 percent.
In Amsterdam, the AEX index rose 0.4 percent and Milan's MIB30 index gained 0.1 percent. But the SMI in Zurich was down nearly 1 percent with pharmaceutical company Novartis falling 4.5 percent after it withdrew its irritable bowel syndrome drug Zelmac from a European Union regulatory review in a row over clinical results.
The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 0.3 percent, with the distributors sub-index rising by 6.7 percent.
In the U.S., the Nasdaq composite index opened higher with bargain hunters around after Wednesday's fall of more than 4 percent. It was up 26.61 points, or 1.3 percent, by mid-morning to 2,111.11, while the Dow Jones industrial average was 0.2 percent higher at 10,895.93.
In the currency market, the euro was trading at 84.66 U.S. cents, around a six-month low after European Central Bank officials said they would not intervene to prop up the currency.
"The signs are the bank won't move soon to cut rates," Adrian Schmidt, a market strategist at the Royal Bank of Scotland, told CNN. "We see the euro falling to 83 cents later this year."
Defensive stocks in favour in Paris included European aerospace and defense group EADS (PEAD) rising 3.6 percent, consumer hair care group L'Oreal (PRO) adding 1.3 percent, and food producer Danone (PDNO) gaining 2.7 percent.
In Frankfurt, Deutsche Telekom (DTE) was up 1.1 percent after completing the $26 billion acquisition of VoiceStream Wireless of the U.S.
In Paris, France Telecom (PFTE) fell 1.2 percent after saying it would sell its stake in Sprint, the U.S. long-distance phone company, for about $1.6 billion.
Auto stocks came under pressure after investment bank UBS Warburg said it would recommend investors buy Japanese carmakers as Western European sales weaken.
France's PSA Peugeot-Citroen (PUG) dipped 0.7 percent and rival Renault (PRNO) declined 1.1 percent. Volkswagen (FVOW), Europe's largest automaker, slipped 0.5 percent.
UK industrial automation and controls group Invensys (ISYS) rose 6 percent. The company reported a 19 percent fall in full-year operating profit before exceptionals, in line with expectations, and announced another 3,500 job cuts due to the economic slowdown in its U.S. market 
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