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Mixed Day Sees Buyers Trickling Back to the Market

FRANKFURT -- The market maintained a cautiously upbeat mood, with stocks mostly holding near the levels attained in Monday's explosive rally.

Keying the mild rally were gains in the dollar to 1.6423 marks after comments from


council member Klaus-Dieter Kuehbacher, who said in a radio interview that a dollar below 1.60 marks would be cause for concern. Also, seeming to contradict recent statements by Bundesbank President

Hans Tietmeyer

, he said a Bundesbank rate cut was possible before European monetary union starts Jan. 1.

Kuehbacher's remarks may have been an attempt at damage control after

European Central Bank


Wim Duisenberg

last night said he was not concerned about the decline in the dollar. Duisenberg also splashed cold water on hopes for a Bundesbank rate cut.

In Frankfurt, the

Xetra Dax

was up 16 points at 4269, while in London the


was down 47.50 at 4990 and in Paris the

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was up 27 at 3306.

S&P 500

futures were down 2.50 at 1000.50. U.S. and German bonds were up, with the U.S. long bond yielding 5.06%. And overnight in Asia, most stock markets fell, with the


down 1.3%.

Among the bigger gainers in Europe were a couple of telecoms,




ALA ADR), up 4.1%, and




ORNGY ADR), up 2.2%. And the bigger losers included

SmithKline Beecham


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SBH ADR), down 4.4%, and



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SAP ADR), down 4.1%.

Banks, after gaining earlier this week, were mixed, with some falling prey to profit-taking.

Deutsche Bank

was down 0.6%, but up 14.4% on the week, and


was down 1.5%, but still up 5.7% on the week.

Richard Vennekold, head of the European investment group at

Hypo Vereinsbank

in Munich, said investor sentiment in Europe appeared to be shifting: "A lot of people missed that rally, and now they are buying dips," he said of stocks' recent 6%-7% gains. "I think we saw the bottom last week. I'm not saying we might not retest the lows, but I think the worst is over."

But he conceded that the market was still jittery, and that it would need time to consolidate before mounting a major charge higher. He said that on dips he would be buying insurance companies, telecoms, autos and pharmaceuticals.

Toby Denne, head of European equities trading at

Credit Lyonnais

in London, said he has been advising investors to begin selective buying, especially those who have liquidated stock positions last summer with the European markets near record highs.

Denne said those investors should not make the classic mistake of being smart enough to sell near highs, but not smart enough to buy back in near a bottom. It is better now to risk an additional 10% drop in stocks than to miss an explosive rally, he said.