Publish date:

Trading in Europe Slows Ahead of U.S. Jobs Data

Traders say yesterday's market action represented a classic battle between bulls and bears.

FRANKFURT -- Stocks opened down after overnight losses on Wall Street and in Asia, but were able to bounce back as the lower prices attracted buyers, shorts covered positions and some good corporate news soothed earnings worries.

By midday, indexes were mixed, with traders saying stocks were trapped in the middle of a classic battle between bulls and bears. Trading had slowed sharply ahead of the U.S. January jobs report, which could have a huge impact on U.S. yields and Wall Street.

In Frankfurt, the

Xetra Dax

TST Recommends

was up 5 to 5066. In London, the

FTSE

was down 38 to 5901. In Paris, the

CAC

was up 7 to 4175.

The dollar was strong at 113.03 yen and against the euro at $1.1314.

A couple of the biggest gainers in Europe were in Frankfurt.

Henkel

, the world's largest maker of adhesives, soared 9.6%. The company announced it would spin off it chemical products unit, dividing it into three divisions and keeping it as a wholly owned subsidiary. Top management held a conference call afterward with analysts, who liked what they heard.

German sportswear and equipment firm

Adidas-Salomon

gained 6.7% after reporting a 13% drop in its 1998 profit, in line with expectations. But the company said it expects earnings and sales to rebound in 1999.

The merger news du jour came from a Swedish newspaper report that

Volvo

(VOLVY)

was poised to finally make a much-anticipated bid for rival Swedish truck maker

Scania

. The paper said Volvo would bid $7.7 billion for Scania, whose shares rose 2.2%. Shares of Volvo, which recently agreed to sell its car division to

Ford

(F) - Get Report

, slipped 1.1%.

Oliver Klemm, head honcho at

Oliver Klemm Wertpapierhandels

in Frankfurt, said the Dax was able to bounce off a key support level this morning around 4980. If that level is broken, he fears the Dax would eventual slide to a test of the next major support at 4420.

On the bright side (unless you are a scowling, growling bear), Klemm thinks a huge move to the upside is possible if the Dax is able to close above 5300. The next test would be 5500, and if that is broken, he thinks a move above 6000 for a test of last summer's record high of around 6224 would be likely.

His advice on how to play the market now: "At the moment, I would sit on my hands. If you have cash, wait and see if we hold 4980. If you are long, don't sell. You don't want to sell at what might be a bottom."