Insurance stocks had a soft day as investors began to have second thoughts about defensive cyclicals.
It was time to climb back aboard more growth orientated equities, or so the theory went as - traders and investors waited for the pronouncement from Alan Greenspan and his team on an expected seventh interest rate cut in a row this year.
While they waited, the insurance sector looked to bear the brunt of sector switching, with Swiss stocks among the heavier casualties. Swiss Re fell 2.8 per cent to SFr173 and Baloise fell 2.2 per cent to SFr145.75. In Paris, Axa shed 0.2 per cent at €32.87 and AGF 0.8 per cent at €60.40. Munich Re lost 1.2 per cent at €322.80 and Allianz 0.5 per cent at €312.10.
ING, in contrast, added 2.3 per cent at €36.53 ahead of tomorrow's six-month figures as investors bet that the interim results will be less damaging than market consensus.
Utility stocks suffered a similar sentiment squeeze, with RWE down 1 per cent at €47.65 and Eon 0.4 per cent at €61.11. Suez lost 1.8 per cent at €37.79.
Merrill Lynch gave paper stocks a bit of a push, suggesting that the second half of 2001 could see the bottom of the commodity price cycle, and highlighting recent sector outperformance. "Traditionally the best time to buy stocks is when the pulp price hits the cash cost: we are very close."
UPM-Kymmene, Merrill's top pick in Europe, added 2.8 per cent at €37. Thyssen Krupp pushed lower after Merck Finck cut its rating back from "market outperform" to "market perform" on concern that the steel group would be hard put to hit its profits targets this year. The shares fell 1.5 per cent to €14.73.
A profits warning from D.Logistics cast a cloud over Deutsche Post, turning early results-driven gains for the latter's shares into a rout. Half-year figures from Post had been initially seen as respectable and the stock jumped to €18.18.
