European Midday Update: Markets Lacking Direction in Early Trading

LONDON -- Just like Wall Street Monday, the FTSE 100 lacked direction this morning. An early 56-point index fall has been replaced by a 41.6 point gain to 6588.3 amid low volume. The Techmark index of leading technology shares was up 51.2 points at 3678.5.

However, there was action in BskyB (BSY Quote), which fell 84p to 12.87 on market talk Lehman Brothers, on behalf of German media group Kirch, is selling 20 million shares, approximately a quarter of Kirch's 5% stake, at 12.60 ($19.14) per share.

Once again individual stocks were featured rather than sectors Tuesday, although pharmaceuticals were again on the defensive after Morgan Stanley Dean Witter's cautious note Monday. Glaxo Wellcome (GLX Quote) dipped 44p to 17.38, while merger partner SmithKline Beecham (SBH Quote) retreated 16p to 783. AstraZeneca (AZN Quote) was 43p lower at 27.15.

On the other hand, telecom stocks were mostly firm with British Telecom (BTY Quote) rising 23 to 10.33 and Vodafone AirTouch (VOD Quote) adding 3.5p to 328.5. Colt Telecom (COLT Quote), however, slipped 6p to 27.14, but Cable & Wireless (CWP Quote) firmed 15p to 12.03 after signing a strategic alliance with Microsoft.

ARM Holdings (ARMHY Quote) was at the forefront of technology shares Tuesday morning, climbing 23p to 729. Baltimore Technologies (BALTV Quote) gained 23p to 588.

Cadbury Schweppes (CSG Quote) attracted fresh support and rose 11.5p to 434, still on hopes that the company may link with Danone (DA Quote) of France to launch a bid for Nabisco (NA Quote). Danone was up 3.90 euros at 133.80 ($126.83).

Europe's other major stock markets were also largely without direction early Tuesday, with the Xetra Dax in Frankfurt up 43.7 to 7451.7 and the CAC 40 in Paris 30.6 higher at 6686.9. The Neuer Markt's tech-heavy Nemax 50 index was near unchanged at 6676.9.

In Frankfurt, financial issues were making some of the biggest moves, after Deutsche Bank (DTBKY Quote) announced it was planning to unload part of its sizable stake in insurer Allianz. Midsession Deutsche Bank was up 1.44 euros at 73.23 and Allianz was 17.45 euros lower at 367.50. Elsewhere, Dresdner Bank (DRSDY Quote) was up 0.84 euros at 45.84 and Hypovereinsbank (HVMGY Quote) was 1.65 higher at 71.75.

Blue-chip German tech shares were higher, with software maker SAP (SAP Quote) up 13.54 euros at 635.50, Siemens (SMWAY Quote) up 1.82 euros at 168.82 and Epcos (EPC Quote) 0.09 euros higher at 143.84.

Major European telcos were also in positive territory Tuesday. Deutsche Telekom (DT Quote) was up 1.44 euros at 73.23, Telefonica (TEF Quote) was up 0.64 euros at 23.51 and France Telecom (FTE Quote) rose 3.10 euros to 170.10. Telco equipment maker Alcatel (ALA Quote) climbed 0.85 euros to 65.75, after forecasting strong sales growth for this year.