Stocks Slide Despite Alcatel's Expansion Plans

The French telecom concern is buying U.S. rival Xylan.
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FRANKFURT -- Stocks posted mild declines, pressured by concern about rising U.S. bond rates, slowing European economic growth and political and labor struggles in Germany.

But high levels of liquidity cushioned what otherwise might have been a larger fall. And the weaker euro, though reflecting gloom, nonetheless also served to support markets, giving exporters here a competitive advantage.

By early afternoon, most indices were off morning lows. In Frankfurt, the

Xetra DAX

was down 52 points, or 1.1%, at 4726, while in London the


was down 20 at 6040 and in Paris the


was down 6 at 4025.

Dutch business software firm


fell 5.4% after reporting disappointing fourth-quarter results and a cautious 1999 outlook. French automaker


slipped 5.4% after warning of profit pressures this year.

And in London, support services company,

Rentokil Initial

crumbled 7.1% on worse-than-expected earnings, which it blames in part on strength in sterling and economic woes in Asia.

French telecom equipment maker



agreed to buy a U.S. rival,



for about $2 billion. Investors were pleased with Alcatel's attempt to build up its U.S. presence, with shares rising 4.1%.

The market is starting to focus on the Thursday meeting of the

European Central Bank's

policymaking Governing Council. But the chances for an easing Thursday and in coming months are looking slim, with several central bankers this week saying current levels are appropriate. Although this is no

surprise to readers of

, the broad market is only now coming around to this view, which was reflected in a front-page story today in the

Financial Times