LONDON -- It was a day billed by some as being "historic", with the introduction of some key changes to the way European share indices are calculated that will eventually see billions of pounds flowing into U.K. equities. But in the end it was a bit of a damp squib.
What observers were banging on about was the re-basing today of the Dow Jones
indices to a so-called free float basis. Other indices such as the FTSE are expected to follow suit. The indices are moving increasingly to take into account the part of a company's equity that is actually available through the market in a bid to reduce distorted markets in shares with little liquidity. Companies with more shares up for grabs such as
As tracker funds increase their weightings of these U.K. companies, European companies with big government holdings such as
will lose a big chunk of their market value.
So much for the theory, but if the punters expected a bullish bonanza they were cruelly disappointed. "It was a fairly typical Monday and we haven't seen volumes particularly out of the ordinary," one dealer said. "There has been a lot of rebalancing of portfolios over the least few weeks, but a lot if it has been done and dusted."
spent the day performing a timid dance in and out of positive territory and, despite a brief foray into the black during the afternoon, it closed the day down 7 points at 6,410 and the
closed down 55 points at 3,828. Keeping a lid on any enthusiasm was a poor opening performance on Wall Street.
Telecom and tech stocks provided the major drag on the London markets as investors took their cue from Friday's sell-off on the Nasdaq.
Cable & Wireless
took a knock of more than 8% to
10.10 ($14.14) and
lost 4.75p, or 2.8%, to 165.25. The heavy hitter in the sector, Vodafone, also closed with a 5.5p loss, or 2.0%, at 264.5p. Not even an announcement of a link up between
-- part-owned by Vodafone -- and
on a third-generation mobile project dispelled the gloom.
tried to save the day. The group was earlier up on a move towards closer links with
. The idea is for the two to merge some of its business services operations. Analysts said the move would be good, but was unlikely alone to resolve BT's debt hassles. After a brief flirtation with some price gains, BT's shares ended unchanged at 795p.
Europe's Continental bourses also finished in negative territory, as the
in Paris closed down 92.3, or 1.4%, at 6,522.4 and late in the German trading session the
in Frankfurt was off 80.1, or 1.1%, at 6,919.5. The Neuer Markt's tech-heavy
index was 92.9 lower, or 1.6%, at 5,702.4.
Many technology shares labored all day following the
poor finish on Friday.
was down 4.58 euros, or 2.6%, at 175.32 ($149.02),
fell 1.21 euros, or 2.5%, to 47.00 and
was 6.20 euros lower, or 2.3%, at 263.80.
Telecoms also were lower, with
down 0.99 euros, or 2.3%, at 42.25,
closing down 0.85 euros, or 3.5%, at 23.70 and
finished off 3.10 euros, or 2.5%, at 123.00.
Telco equipment maker
dropped 4.10 euros, or 4.5%, to 87.20.
rose 0.12 euros, or 0.3%, to 48.01, after announcing it would acquire investment bank
for $1.4 billion in stock.