FRANKFURT -- After spurting higher on the open, the stock market quickly turned cautious after last week's huge gains, and most indices slid into negative territory.
The overall market weakness came despite a long list of merger news that boosted some individual shares. Near the top that list was an announcement that
British American Tobacco
in a $7.5 billion stock swap from Swiss firm
and South African firm
. Shares of BAT surged 13%.
confirmed they were in merger talks. In London, Lasmo jumped 12.2%, while Enterprise fell 0.7%.
In Frankfurt, the
was down 69 points, or 1.3%, at 5301; in London the
was down 59, or 1.0%; at 6087, and in Paris the
was down 45, or 1.1%, at 4200.
Several names in the telecom sector, among the biggest gainers last week, were among the biggest losers today. In Paris,
fell 5.4% and in London
Cable and Wireless
In Frankfurt, banks were weak, with
down 3.5% and
down 3.1%. And retailer
fell 5.1% on a downgrade. In Paris, a couple of auto-related names bucked the trend, with
, up 5.4%, and
Some traders said the European market was hurt by Brazil jitters and on dollar weakness against the yen. Traders here also were fretting that Wall Street, after record highs last week, might be due for an ugly downward correction, which would most likely drag Europe lower.
futures were down 0.80 of a point at 1286.20, off the overnight session high of 1294.20.
But others maintained that today's losses were mainly technical after last week's huge gains.
Nick Glydon, technical analyst at
Robert Fleming Securities
in London, is one of those, and believes stocks are simply consolidating. He said institutions are cash-heavy and will provide strong buying support under current levels. "I think the market is going to roar to the upside again," he said.
The dollar was ailing against the yen, last bid at 108.91, but near flat at 1.1589 euros. U.S. long bond prices were down on dollar/yen weakness, last yielding 5.29%.
In other merger news,
today confirmed it was in talks with
, but provided no details. Volvo, which rose sharply last week, today was down 4.1%, while Fiat was up 0.2%.
And in a U.S. deal that would have ripple effects in Europe, telecom equipment maker
was discussing buying computer networking firm
for more than $16 billion, according to a
story quoting unnamed industry sources.