European Closing Update: Bourses Can't Recover From Wall Street-Inspired Slide
By the close of business in London, the much-feared bout of flu on Wall Street turned out to be nothing more than a sneeze. This still couldn't breathe any new life into the London markets, though, and the
FTSE 100
ended down 105.7, or 1.7%, at 6,274.1.
The short term doesn't look too promising either. Investors who are hanging on in the hope of better times may find their positions squeezed even further as the U.K. market still runs the risk of catching a severe cold ahead of the Feb. 1-2
Federal Open Market Committee
meeting, which is widely expected to sanction a 25-basis-point rise in the fed funds rate to 5.75%.
The U.K. trading session was complicated by a train strike affecting much of South London, and with investors electing to sulk over higher-than-expected inflation data and growing concern over another rise in interest rates, it was none too easy to find any signs of encouragement.
Some solace did come in the form of
British Gas
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, which jumped 24 to 399p after a strong recommendation from
Lehman Brothers
.
Hopes of further consolidation in the media sector saw
Daily Mail & General Trust
rise a further 25p at 23.29 pounds.
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EMI Group
held onto earlier gains, rising 15 to 735p as investors warmed to news of its planned merger with
Time Warner's
(TWX)
Warner Music
.
Cable & Wireless
(CWP)
provided another oasis of hope with a gain of 45p at 12.35 pounds after the company revealed Monday it is in talks to merge its Hong Kong subsidiary with
Singapore Telecommunications
.
In the retailing sector, recently bombed out
J. Sainsbury
rallied 9 1/2 to close at 348p, but recent takeover favorite
Marks & Spencer
fell 12 to 292p, with investors failing to derive any inspiration from the appointment of new chairman Luc Vandevelde from the French group
Promodes
.
British Biotech
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collapsed as investors reacted with dismay to the third failure of one of its clinical drug trials -- the share price fell 18 1/2 to 28 3/4p.
Progress towards the planned merger between
Glaxo Wellcome
(GLX)
and
SmithKline Beecham
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left both share prices under sedation, the former slipping 28p to 15.48 pounds and the latter 25 lower at 696p.
The major continental bourses fell early Tuesday and stayed in negative territory the rest of the session. The
Xetra Dax
in Frankfurt was off 1.77% at 6809.64 and the
CAC 40
in Paris closed down 1.64% at 5597.50.
The telecom sector had mixed results, with
Mannesmann
(MNNSY)
shares closing down 7.55 at 258.60 euros, Spain's
Telefonica
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off 0.68 at 24.42 euros, and
France Telecom
(FTE)
in Paris ending down 4.10 at 123.10 euros.
Deutsche Telekom
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, on the other hand, was able to rise 1.61 to 66.01 euros after formally announcing plans to float its Internet unit
T-Online
in mid-April and its wireless unit
T-Mobil
this upcoming autumn.
Technology shares in Frankfurt were also among the few able to buck the broader downward trend, as Europe's largest software maker,
SAP
, closed up 17 at 772 euros and Germany's largest electronics company
Siemens
(SMAWY)
climbed 1.35 to 142.00 euros.
One of the day's biggest losers was automaker
BMW
, which tanked 1.36, or more than 5%, to 23.48 euros amid concerns that the ever-strengthening British pound could hurt the recovery of its embattled
Rover
unit.
