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European rally smothered
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August 27, 2001: 12:12 p.m. ET
Technology stocks mixed; Paris slips into the red, Frankfurt up slightly
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LONDON (CNN) - European markets finished the Monday session mixed after Wall Street inched into negative territory.
In Frankfurt, the late trading Xetra Dax index climbed 0.2 percent to 5,399.50, while the blue chip CAC 40 index in Paris slipped 0.2 percent to 4,905.79. The region's largest bourse, London, was closed for a public holiday.
In the U.S. Monday at midday, the Nasdaq composite slipped 0.3 percent to 1,910.03, while the Dow Jones industrial average dipped 16.74 points, or 0.2 percent, to 10,406.43. The Dow had jumped 194.02 points on Friday.
The Nasdaq soared more than 4 percent after U.S. networking bellwether Cisco (CSCO: Research, Estimates) said it saw signs that business was stabilising after steep falls earlier this year.
A growing consensus that euro-zone interest rates will be cut later this week lifted some of the gloom overhanging the markets.
"We believe the time is right (for a rate cut) because of the recent indication given by the European Central Bank in its monthly report and other statements which suggest they are pretty much satisfied the peak in inflation is behind us," Hans Guenther Redeker of BNP Paribas told CNN.
A majority of economists predict that the ECB will cut its official rate for just the second time this year when policymakers meet Thursday. The bank is likely to opt for a quarter-percentage-point cut to 4.25 percent, according to most forecasters.
In Frankfurt Monday, electronic component maker Epcos (FEPC) led the list of rising shares, with a gain of 4.6 percent.
Chipmaker Infineon Technologies (FIFX) was up 1 percent after it said it is in talks with Japanese chip firm Toshiba about cooperating in the production of memory chips. Semiconductor producers are being forced to look at ways of cutting costs after chip prices tumbled in the past year.
Philips Electronics, Europe's third-largest chipmaker, rose 2.2 percent in Amsterdam. Chief Executive Gerard Kleisterlee said Friday the decline of the semiconductor market has bottomed out.
ASML, a producer of equipment for microchip production, added 1 percent.
Shares of leading European telephone operator Deutsche Telekom (FDTE) pared earlier gains, rising 0.7 percent. The rally marked a partial comeback from this month's steep decline, triggered by concerns about share sales by investors who received Telekom stock in payment for the German company's VoiceStream Wireless takeover.
Auto stocks were among the biggest decliners in Frankfurt on news U.S. existing home sales fell 3 percent in July, suggesting consumers may be losing confidence in the U.S. economy, the biggest market for automakers.
Luxury automaker BMW (FBMW) and DaimlerChrysler (FDCX), which owns loss-making U.S. automaker Chrysler, both fell more than 1.2 percent. However, the biggest faller was German financial services company MLP (FMLP), which fell 2.8 percent.
European Aerospace Defense & Space (PEAD), which owns 80 percent of European aircraft maker Airbus, fell 2.4 percent in Paris. Other stocks adding to the negative sentiment included, heavyweight France Telecom (PFTE), which fell 1.8 percent, and IT consultant Cap Gemini Ernst & Young (PCAP), which slid 1.1 percent.
Some technology stocks continued to ride on Friday's strong gains. Telecom equipment maker Alcatel (PCGE) rose 1.8 percent, defense and industrial electronics company Thales (PHO) gained 1.3 percent, and consumer electronics company Thomson Multimedia (PTHM) gained 1.2 percent.
The Nordic region's widely-held telecom equipment makers had a mixed session. Nokia, the Finnish maker of mobile phones, gave up earlier gains, sliding 2.4 percent, while its Swedish rival Ericsson gained 1.9 percent.
Finnish telephone network operator Sonera closed up 2 percent, having charged as much as 18 percent higher at the open, after saying at the weekend it sold 21.9 million Deutsche Telekom shares in July to raise  565 million ($514 million), which would help it pay down its heavy debt burden.
Belgian-Dutch financial services group Fortis rose 1.6 percent in Amsterdam after reporting better-than-expected first-half results.
Amsterdam's AEX index and the SMI in Zurich both rose 0.7 percent, while Milan's MIB 30 slipped 0.4 percent. 
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