Europe recovers losses

May 16, 2001
Web posted at: 1626 GMT

LONDON (CNN) -- European markets were recovering earlier losses at the close on Wednesday, led by a turnaround on Wall Street.

U.S. traders were taking the view that a half-point interest rate cut by the Federal Reserve would lift the U.S. economy by year's end. London's FTSE 100, which had been down more than 1 percent by midday, ended up 0.6 percent at 5,877.5.

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Frankfurt's electronically traded Xetra Dax staged a similar recovery, ending 0.2 percent higher at 6,079.44. In Paris, the CAC 40 blue chip index was off its lows of the day to end at 5,522.69, down 0.4 percent.

In Amsterdam, the AEX index was down 0.7 percent while the SMI in Zurich moved into positive territory, rising 0.3 percent. The MIB 30 in Milan lost just 0.2 percent.

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was virtually unchanged, with the mining sector up 4.8 percent and information technology down 1.1 percent.

In the U.S., the Nasdaq composite index rose 27.57, or 1.3 percent, to 2,113.15 after opening lower, while the Dow Jones industrial average was up by the same percentage at 11,013.05.

A half percentage point rate cut by the U.S. Federal Reserve had earlier failed to inspire the markets after the Fed indicated more rate cuts could be on the way and the world's biggest economy had a long road to recovery.  

In the currency market, the euro strengthened more than half a cent against the U.S. dollar, fetching 88.40 cents from 87.83 cents in late New York trade on Tuesday.

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In London, Britain's fourth-biggest grocer, Safeway (SFW), was the best performer, rising nearly 6 percent after unveiling a sharp rise in annual profits. Mining company Anglo American (AAL) rose 5.7 percent in anticipation of its bid to buy out diamond giant De Beers would be approved on Friday.

British telecom operator Cable & Wireless (CW-) rose 3.5 percent despite reporting a 29 percent decline in profit. Its chief executive, Graham Wallace, said the company was in a strong position in its debt-ridden sector because of the cash pile of more than £6 billion it had amassed.

Telecom equipment maker Alcatel (PCGE) was down nearly 4 percent in Paris on news that a major customer was scaling back on two projects. Alcatel also announced it would pay defence company Thales (PHO) £795 million for the 49 percent of Alcatel Space it did not already own. Thales was the biggest gainer on the CAC, up 4.2 percent.

Among the leading European technology stocks on the downside, Finland's Nokia fell 0.5  percent. Cross-border rival Ericsson, the biggest wireless infrastructure manufacturer, declined 0.8 percent.

Philips, Europe's biggest consumer electronics company and second-biggest chipmaker, shed 2.6 percent. Infineon Technologies (FIFX), Europe's No. 3 chipmaker, fell 1 percent and the biggest chipmaker, STMicroelectronics (PSTM), dipped 1.6 percent.

Media stocks took a hit in London over fears of a sustained advertising slump. Granada Media (GME), Britain's biggest terrestrial commercial broadcaster, fell 2.9 percent and Pearson (PSON), publisher of the Financial Times, was down 3.4 percent. The biggest advertising company, WPP (WPP), fell 2.9 percent.

Telefonica, Spain's dominant phone company, fell 2.4 percent and helped drag down the IBEX in Madrid by 0.8 percent at the close. The company reported first-quarter net profit rose 25 percent, even though operations in Latin America held back gains.

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