FRANKFURT -- Stocks opened lower following Wall Street's losses but shook off the early jitters and reversed course behind merger news, strong earnings and a buoyant dollar.
The big story was
agreement to buy
auto division for a higher-than-expected $6.5 billion dollars. Volvo shares were up 6.4%. Volvo wants to focus on building trucks and other commercial vehicles, and has expressed interest in acquiring Swedish truck maker
, whose shares were up 7%.
In Frankfurt, the
was up 19 points at 5057, while in London the
was up 3 at 5880, and in Paris the
was up 74 at 4172.
Investors were paying little attention to losses in Asia, led by a 3.7% drop in Hong Kong's
. And with markets still dripping with liquidity, investors preferred not to focus too hard on Brazil's woes. However, the growing
threat of warning strikes by Germany's powerful IG Metall union was weighing on sentiment in Frankfurt.
By midday, stocks were stuck in tight ranges ahead of Wall Street's opening clang.
futures were up 4 points at 1253, off the overnight session low of 1243.
Stock buyers were emboldened by gains in the dollar against the euro, which helps profits of European exporters. The euro was last bid at $1.1405. The dollar also was up slightly against the yen at 115.86. The U.S. long bond was yielding 5.15%.
Christina Pollowy, an institutional sales adviser at
in Frankfurt, admitted that she was baffled by the current market. "I'm undecided what to tell my clients," she said. "The market appears trapped."
But she noted, as have others in Europe, that although the market might be trapped, the downside looks fairly well-protected by waves of liquidity and near record low rates and the upside by earnings and emerging market worries. She expects company news in the next couple of weeks to help provide direction.
today was again in the news. The
reported that U.S. auto-parts maker
is expected to bid $6.8 billion in cash for LucasVarity.
, in a hostile takeover attempt, has already made bid $6.5 billion. In London, LucasVarity shares were up 1.5%.
Earnings news was mixed this morning. On the happy side, shares of U.K. software and computer company
shot up 13.6% after an 84% gain in first-half profit. And shares of Sweden's
jumped 5.5% after the mobile-phone firm reported 1998 results.
In Paris, shares of
rose 2.4% after better-than-expected fourth-quarter profits. But shares of French telephone-equipment maker
fell 3.6% after the company reported disappointing second-half earnings.
was up 3.2% after announcing after the close Wednesday that it was raising its dividend by 22% and was confident earnings will grow.
Also in Frankfurt,
was down 4%, giving back some of its gains of earlier this week.