European Midday Update: London Climbs Higher as Continent Inches Lower

LONDON -- Despite Wednesday's decision by the U.S. Federal Reserve to maintain its tightening bias, London traders decided to take a sanguine approach Thursday.

After a very quiet start, the main market pushed higher, and as midday approached the FTSE 100 was up 47.3 points to 6479.60. Meanwhile, the Techmark 100 struggled to make headway in either direction and was down 12.21 points to 3182.16.

Generally, it was undeniably a quiet day, so some traders started to focus on MSCI's quarterly structural changes to their indices due out Thursday night. They are used by many fund managers to help arrange their portfolios and measure their performance.

Some are speculating that tonight's alterations may have an adverse impact on U.K. telecommunications and health care stocks, as their weighting will be reduced to make way for under represented Spanish telcos and Dutch and Italian pharmaceuticals.

But others point out that if MSCI announces a move toward free-float weighting, which many believe it will do in the near future, U.K. telcos will definitely benefit. This is because the weighting of European incumbents, such as Deutsche Telekom(DT) and France Telecom(FTE), will be reduced as the German and French governments still hold large stakes in the companies.

In any event, the FTSE 100's two heavyweights were relatively flat. British Telecom (BTY) relinquished earlier modest gains to stand 1p lower at 676 ($9.65) and Vodafone (VOD) stood 2.75p higher at 266.25 by midday.

Encouragingly, Cable & Wireless (CWP) built on Wednesday's gains, rising 32p to stand at 919. In contrast, alternative Colt Telecom (COLT) slid into negative territory, down 35p to 17.60.

Pharmaceuticals were mixed. AstraZeneca (AZN) recovered from its Nexium-induced hangover to stand 44p higher at 32.29. Elsewhere, Glaxo Wellcome (GLX) added 3p to 20.32, while future partner SmithKline Beecham (SBH) came off by 3.5p to stand at 920.

Most Europe's other major stock markets were lower Thursday, as the European Central Bank kept its main interest rate unchanged at 4.75%. The CAC-40 in Paris was off 64.6 at 6237.2 and the Xetra Dax in Frankfurt was down 95.6 to 6865.5. The Neuer Markt's tech-heavy Nemax 50 index was 152.8 lower at 3796.2.

Amid continuing fear about its U.S. operations, DaimlerChrysler (DCX) weighed heavily on the Dax. The carmaker's shares fell 1.79 euros to 50.65 ($43.42). Volkswagen (VLKAY) dipped 0.90 euro to 57.65.

Drug company Bayer (BAYZY) dropped 1.49 euros to 49.76, after the company reported disappointing third-quarter earnings. Rival BASF fell 0.56 euro to 43.54.

Techs and telcos were also lower, as STMicroelectronics(STM) fell 1.45 euros to 52.55, SAP (SAP) dropped 12.31 euros to 200.89 and France Telecom was down 3.40 euros to 112.90.

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