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In Europe, New Year's First Bout of Profit-Taking Arrives

After a solid surge in the first three trading days of the new year, major bourses finally cooled and sold off.

FRANKFURT -- It's a sad reality of every investor's life: Markets do not move up in straight lines. And, today, major bourses finally got real, selling off after the powerful surge in the first three trading days of the new year.

"The market went too far too fast," said Christina Pollowy, in institutional sales at

Sal Oppenheim

in Frankfurt. "Why not take some profits?"


But as Big Ben was tolling noon in London, the

Bank of England

spread some good cheer by unexpectedly cutting rates by 25 basis points, helping give markets a mild boost from session lows.

In Frankfurt, the

Xetra Dax

was down 114 points to 5328; in London, the


was down 10 to 6138; and, in Paris, the


was down 41 to 4253.

In addition to the BOE rate cut, a couple of other factors also helped limit European stocks losses. First, eurobond prices rose, nudging yields to record lows. Plus, the dollar gained against the euro to 1.1657, which helps European exporters. The U.S. long bond was yielding 5.17%, and the dollar was down against the yen 111.32.

Merger hopes got another boost from a report on

Bloomberg News

that said

MCI WorldCom


was preparing to enter the fray to buy

AirTouch Communication

(ATI) - Get Free Report



(VOD) - Get Free Report


Bell Atlantic


have already made bids. In London, Vodafone shares were down 3%.

Some other highflying telcoms also suffered today.

Cable & Wireless


was down 2.9%, and



was down 3.0%. In Paris,



was down 3.2%, and

France Telecom


was down 2.4%.

And in other merger news, the

Financial Times

reported that



has hired a U.S. investment bank to explore a possible sale or merger of its car division. Volvo was up 2.4% today and up nearly 17% for the week.

But other autos slipped after this week's dizzying gains.



was down 1.9%, and


was down 4.6%.

Today's market slide was not particularly welcomed by panting bulls. But they were not worried -- not yet, anyway -- and see the weakness as an annoying correction, a chance for the market to gather steam for another exhilarating surge higher.

Sal Oppenheim's Pollowy is nervous that economic growth will slow and company profits will weaken, hurting the stock market in the midterm. But she agrees that stocks probably will resume their rally in the near term. "I think liquidity is so huge that we will make new highs again," she said.

But first things first, and Wall Street's mood today after Wednesday's frenzy of fresh record highs will most likely dictate whether Euro markets this afternoon slide further or regain lost ground.