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Ifo rise fails to cheer markets
LONDON, England -- A stronger-than-expected Ifo index of German business sentiment for May failed to offer a sustained boost for stocks as concern over the strong euro continued to dominate market sentiment. Winning stocks Monday, such as Telecom Italia and DaimlerChrysler, also failed to give markets a fillip, with Paris ending down. London was closed for a Bank Holiday. Investors paused to gauge the impact of the surging euro on exporters while the prevailing mood worldwide was also unclear in thin trading with New York also closed for a public holiday. Germany's key Ifo business sentiment indicator posted a surprise rise from 86.6 percent in April to 87.6 percent in May, raising hopes for a second-half recovery in Europe's biggest economy. This follows a shrinkage in the first quarter. (Full story) But it was not enough to prevent markets ending slightly lower as few expect Europe's biggest economy to recover strongly anytime soon. "Ifo was a little bit encouraging, but given volume is very low, it was not enough to help the markets very much today," Lars Wohlers of WestLB bank in Duesseldorf told Reuters. "The overlying topic is the strong euro. The uncertainty about currency developments and their impact on the export side will remain a shadow over the market," Wohlers said. The Paris CAC-40 blue chip index in Paris closed 0.40 percent lower at 2,885.52 and the Zurich SMI closed down 0.79 percent at 4,537.80. At 1600 GMT Frankfurt's Xetra Dax was just ahead, up 0.13 percent at 2,826.44. At the same time with only Frankfurt still trading, the FTSE Eurotop 300 index was off 0.25 percent at 800 points. The DJ Euro Stoxx 50 index dropped 0.2 percent to 2,241 points. Bourses again looked hemmed in by concerns about the rising euro's impact on corporate earnings and the ailing European economy, with little immediate relief in sight. Technology and chemicals, two key export sectors, were the weakest industry groups. An exception was shares in Telecom Italia which hit their best levels for the year as the phone company's plans to merge with parent Olivetti entered the home straight despite protests from some international investment funds. Telecom Italia was up 1.6 percent at 7.64 euros, while Olivetti gained 1.5 percent to 1.02 euros. DaimlerChrysler was among the top advancers, its shares were up 0.6 percent at 25.67 euros, helped by an in-line profit forecast from Japan's Mitsubishi, 37 percent owned by the German group. Shares of cash-strapped engineering firm ABB slid 4.5 percent to 4.02 Swiss francs after a new delay to a $1.3 billion asbestos lawsuit ruling raised concerns over the timing of a crucial asset sale to help ABB cut its debt. Drug firm Roche eased 1.7 percent to 96 Swiss francs, hit by a rating downgrade. Rexel, the world's biggest electrical equipment supplier, jumped 4.8 percent to 28.24 euros after news the French group had launched a 417-million-euro capital increase, a step seen as a prerequisite for the firm's divestment by parent Pinault Printemps Redoute. Deutsche Lufthansa rose 1.3 percent to 8.69 euros after denying a newspaper report it was planning job cuts to weather the current aviation crisis brought on by the September 11 attacks and the outbreak of the SARS virus. The sector is also eyeing British Airways, which will meet later this week to discuss strategic options in the light of a proposed tie-up between Virgin and BMI British Midland. (Virgin 'pondered BA bid') Dutch retailer Ahold fell 1.5 percent to 6.35 euros after its $880 million book-keeping scandal widened in the United States and to subsidiaries in Spain.
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