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European Stocks Wobble as They Wait to Take Cues from U.S.

FRANKFURT -- Too much uncertainty.

That was a main factor that hammered markets off session highs after they were catapulted higher on the open by Wall Street's solid gains yesterday. Early this afternoon markets were mixed and wobbly on uncertainty about how Wall Street will react to today's U.S. second-quarter GDP figures and the yen's sharp decline overnight.

The yen wilted to a six-week low against the dollar after Japan's new finance minister,

Kiichi Miyazawa

, said market forces, not government manipulation, should determine yen and stock prices. The dollar was last at 144.29 yen.

Markets across Europe were extremely jittery, and as the morning progressed into early afternoon selling pressures increased, although volume was fairly light. Germany's

Xetra DAX

was down 6 points, or 0.1%, at 5900, off the session high of 5963, while in Paris the

CAC-40

was down 17 points, or 0.4%, at 4180, off the day's high of 4234. In London the

FTSE-100

was down 34 points, or 0.6%, at 5876.

With some bullish sentiment indicators in the U.S. this week at nosebleed levels, there is concern here that yesterday's move on Wall Street might have been a classic bull trap.

S&P 500

futures were doing nothing to soothe those concerns. After spending the morning in positive territory, futures slid into the red early this afternoon, and were down 3.10 points at 1143.00. The dollar was bid at 1.7698 marks, and U.S. long bonds were yielding 5.72%.

Overnight in Asia, markets were mixed. But Japanese stocks got a boost from the weak yen, which is positive for exporters. The

Nikkei

closed up 177 points, or 1.1%, at 16,379. Hong Kong's

Hang Seng

ended up 30 points, or 0.4%, at 7936.

Joerg Schreiweis, head of European equities and derivatives sales at

DG Bank

in Frankfurt, said some in Europe saw today's U.S. GDP figures as a lose-lose situation. "If the numbers are too strong, Treasuries will be hit, and if they're too weak, earnings will be hit."

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Schreiweis said the market was also rattled by comments from

BMW

chief Bernd Pischetsrieder in the daily newspaper

Sueddeutsche Zeitung

. Pischetsrieder said the boom for German car makers had already peaked, adding that incoming orders for German car producers in the first half of 1998 were down 9% on the year. He also expects a crisis in the next two years that would hit the U.S. first.

In Frankfurt, BMW was down 68 marks, or 3.9%, at 1692 marks. Even highflying

Daimler-Benz

(

(DAI)

DAI ADR), which resumed its recent upward trend on the open, got jabbed by the news. Daimler was down 1.20 marks, or 0.7%, at 183.00, off its session high of 186.80.

In London, the big story was

Lloyds TSB Group

, which reported a 15% drop in first-half net income. Investors had no mercy, smacking Lloyds down 74.50 pence, or 8.3%, to 826.50. Other banks in the U.K. fell in sympathy.

The major bright spot in Europe yet again was U.K. telecoms after

Merrill Lynch

upgraded

Orange PLC

(

(ORNGY)

ORNGY ADR), which was last up 42.50 pence, or 6.1%, at 738.00. But profit-taking knocked Orange off the session high of 775. Other U.K. telecoms rose on spillover, including

Vodafone

(

(VOD) - Get Report

VOD ADR), up 2.7%.