Europe holds onto gains

February 26, 2002 Posted: 1808 GMT

LONDON (CNN) -- European markets ended higher on Tuesday, holding on to their earlier gains despite a slump of Wall Street following negative economic data.

The closely watched Conference Board index of U.S. consumer confidence fell to 94.1, its lowest level since November and below economists' average forecasts of a dip to 96.8.

"It's below what the market expected. We were looking for a figure of about 95.5," said Paul Mortimer-Lee, chief capital markets economist at BNP Paribas in London. "People feel that the economy's turned and therefore confidence should be rising, but the whole Enronitis thing has hit confidence."

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The U.S. numbers dampened what had been an upbeat reaction to the Ifo survey of German business confidence, which rose more than expected in February, indicating that Europe's biggest economy was on the road to recovery.

London's FTSE 100 rose 0.8 percent to 5,139 and the CAC 40 blue chip index in Paris gained 0.8 percent to 4,340.86, while Frankfurt's electronically traded Xetra Dax was up 0.4 percent at 4,883.07 in late trading (the German market closes at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, rose 0.6 percent, with the media, tech and telecoms sectors among the top gainers.

British media group Pearson (PSON), publisher of the Financial Times newspaper, gained 6.5 percent after Morgan Stanley raised its rating on the stock to "outperform" from "neutral." That followed an announcement on Monday that the company planned to sell its remaining specialty publications.

UK mobile phone group Mm02 (OOM) led telecoms stocks higher in London, ending up 6.5 percent, as the sector enjoyed a carry-on effect from gains Monday on Wall Street.

Finland's Nokia, the world's biggest mobile phone maker, ended 0.5 percent higher -- off its highs for the session – while the world's biggest producer of mobile networks Ericsson fell 1 percent.

Europe's largest wire line equipment group Alcatel (CGEP) rose 2.6 percent and Europe's largest computer services firm, Cap Gemini (PCAP), gained 3.1 percent.

Thyssen Krupp (TKAG), the German steel and engineering group, headed the gainers board in Frankfurt. It reported a sharp fall in first quarter profit but the decline was not as large as analysts had expected.

Shares in French tyremaker Michelin (MICP), was the top gainer in Paris, rising 5.1 percent after it predicted profitability would improve this year.

Among Europe's smaller markets, Amsterdam's AEX index rose 0.5 percent and Milan's MIB30 index was also 0.5 percent higher, while the SMI in Zurich slipped 0.4 percent.

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In the U.S. on Tuesday, stocks slumped at midday after economic data showing that consumers are nervous about the economic outlook appeared to stall a powerful two-session rally.

The U.S. consumer confidence report fell more than expected in February, dampening recent hopes that an economic recovery was under way.   Investors could get further clues on Wednesday, when Federal Reserve chairman Alan Greenspan addresses Congress on the economy and monetary policy.

The Nasdaq composite index lost 9.61 points, or 0.5 percent, to 1,760.27, while the Dow Jones industrial average fell 61.31 points, or 0.6 percent, to 10,084.40.