LONDON -- A rise in oil stocks managed to help the London market recover most of its early losses, which were caused by a program trade that was poorly executed and an announcement that Hutchison Whampoa would dispose of more of its stake in Vodafone (VOD) - Get Vodafone Group Plc Sponsored ADR Report.
closed down 19 points to 6,582, clawing back most of a 201-point plunge from a blunder involving a large program trade that took place just after 8 a.m. London time. Talk is that a continental bank sold a basket of stocks for "at best" prices on thin liquidity, sending the market temporarily into freefall.
Sentiment wasn't helped by news that that Hutchison has sold part of its 3.4% stake in Vodafone. The U.K. mobile phone operator's shares fell to as low as 165 pence before recovering to end down 12.75p, or 4.5%, at 270.5 as
said Hutchison is offering a $2.5-billion, three-year bond that will be convertible into Vodafone shares.
Vodafone says that the move takes Hutchison's holding to around 2%. But the big question is: What next? The rumor mill has it that Merrill Lynch "or someone else" is set to make a placement for some or even all of Hutchison's remaining holding.
That leaves the mobile phone operator's shares vulnerable to speculative pressure, but Kevin Lapwood of
says investors knew that Hutchison has been free to dispose of its stake for a week and that the market is being overly effected by short-term nerves. He thinks the stock is oversold at current levels and has a price target on the stock of
With Vodafone's market cap responsible for about 14-15% of the FTSE index, the telecom giant's shadow fell over the rest of the market, which was still digesting Friday's fall on the
fell through the 4,000-point level to close down 19 points, or 0.5%, at 3,991.
However, news that the price of crude oil has risen to $35 a barrel on speculation that OPEC's agreement to boost output quotas won't make much difference helped to lift oil stocks.
closed up 18.5p, or 2.8%, at 671 and
was up 17.5p, or 2.9%, at 627.
Europe's other major stock markets also finished lower, as the
in Paris closed down 28.4, or 0.4%, at 6,675.0 and late in the German session the
in Frankfurt was down 21.2, or 0.3%, at 7,246.6. The Neuer Markt's tech-heavy
index was 78.7 lower, or 1.3%, at 6,185.5.
The Nasdaq's poor performance Friday weighed heavily on technology shares in Frankfurt, as
fell 0.65 euros, or 1%, to 68.25 ($5x.92),
fell 0.72 euros, or 0.7%, to 107.78 and software maker
was 1 euros lower, or 0.3%, at 291.
tanked 7.49 euros, or 7.2%, to 97.50 after
Morgan Stanley Dean Witter
downgraded the stock to neutral.
Many big telecoms also struggled, with
down 1.19 euros, or 2.7%, at 43.46,
finishing off 0.89 euros, or 3%, at 29.41 and
closing down 5.70 euros, or 4.1%, at 132.50.
Elsewhere in Paris, oil company
surged 7.40 euros, or 4.1%, to 186, amid speculation OPEC's decision over the weekend to increase oil production won't lower energy costs that quickly.