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Europe gains as war worries ease
LONDON, England (CNN) -- European markets ended higher on Monday, bolstered by technology and insurance stocks, as concerns over a possible war with Iraq eased. However, market activity was limited with Wall Street closed for a public holiday, following a rally by U.S. stocks on Friday. Monday's positive sentiment came after global anti-war demonstrations at the weekend and continuing diplomatic wrangling delayed the prospects over a possible U.S.-led attack on Iraq. London's FTSE 100 rose 2.2 percent to 3,692.4 and the CAC 40 blue chip index in Paris climbed 1.9 percent to 2,882.12, while Frankfurt's electronically traded Xetra Dax was up 1.3 percent to 2,709.62 in late trading (the German markets was set to close at 1900 GMT). The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, gained 1.9 percent. Wall Street staged a late rally on Friday, leading to gains for the first week in the past five, after U.N. chief weapons inspector Hans Blix relieved many traders and observers by coming out far less tough on Iraq than they expected. (Full story) European leaders, who are divided on the issue of Iraq, were attempting to resolve their differences at a summit on Monday. (Full story) Those developments -- plus a reassuring outlook from Dell Computer (DELL), which bolstered U.S. stock on Friday -- gave European investors reason to buy back into the market. "The market is saying that the chances of war have receded, which means chances of economic downturn are receding as well," Lex Werkheim, a fund manager at Eureffect in Amsterdam, told Reuters. Benefitting from Dell's positive report were German chipmaker Infineon (FIFX), which was up 6.4 percent to 6.17 euros in late Frankfurt trading, and French rival STMicroelectronic (PSTM), which gained 6.4 percent to 17.13 euros. Dutch chipmaker ASML was up 7.4 percent to 7.27 euros in Amsterdam. Nokia, the world's largest mobile phone maker, rose 2.4 percent to 13.25 euros and Swedish rival Ericsson gained 7.4 percent to 6.55 crowns after its joint venture Sony Ericsson said on Monday that it expected to return to profit this year. (Full story) French telecommunications equipment maker Alcatel (PCGE) added 6.3 percent to 7.40 euros. German software giant SAP (FSAP) was up 2.5 percent to 85.47 euros in late Frankfurt trading and France's Cap Gemini (PCAP), Europe's biggest computer service group gained 7.4 percent to 24 euros. The insurance sector was higher as investors bought up stocks that have been beaten down in recent weeks due to insurers' heavy holdings of equities. Germany's Allianz (FALZ) was up 3.3 percent to 73.36 euros in late Frankfurt trading, while France's Axa (PCS) rose 3.9 percent to 12.05 euros and the UK's Aviva (AV) added 1.4 percent to 440 pence. Meanwhile, Deutsche Lufthansa (FLHA), Europe's third-largest airline, was up 1.9 percent to 8.43 euros in late trading even as it said a war with Iraq could result in passenger traffic dropping by about a fifth. (Full story) Among the top gainers in London on Monday was Capita Group (CPI), the company behind the world's largest congestion-charging scheme. It's shares rose 5.8 percent to 208.54 pence after the traffic-tax scheme for London's downtown area appeared to run smoothly on its first day. (Full story) Loss-making Italian carmaker Fiat was flat after gaining earlier in the session following news that it had agreed with banks to sell shares worth up to 3 billion euros ($3.2 billion). (Full story) Across Europe's smaller markets, the AEX index in Amsterdam was up 2.4 percent and Milan's MIB30 index gained 1.3 percent, while the SMI in Zurich climbed 2.5 percent. In the U.S. on Friday, the Dow Jones industrial average rose more than 2 percent, or 158.93 points, to 7908.80 and the S&P 500 index climbed 2.1 percent, or 17.52 points, to 834.89, while the Nasdaq composite added 2.6 percent, or 32.73 points, to 1310.17. Financial markets will be closed in the U.S. on Monday in for the President's Day holiday.
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