Frankfurt DAX: The Frankfurt market lost ground, getting little inspiration from the anaemic opening session on Wall Street and the early losses in London after the surprise quarter-point interest rate rise by the Bank of England. The market continued to lose ground in afterhours electronic dealing with the Xetra DAX down 0.6 per cent. Deutsche Bank and Dresdner were both weaker after a lawsuit was issued over alleged wartime dealings, while Volkswagen saw some profit-taking after positive a.g.m. comments.
On the currency markets, sterling initially rose against the deutschmark after the British rate rise, but soon reversed direction. Dealers believe the British currency may weaken further against the D-mark.
Paris CAC-40: French shares finished lower as investors took profits after Wednesday's record high. The trend was exacerbated by the unexpected rise in British rates and by a huge drop by Alcatel, which closed down almost 10 per cent after announcing a $4.4 billion acquisition in the US. Technology stocks were generally lower, mirroring the weakness in their US counterparts, but the auto sector bucked the market's downward trend.
Computer maker Bull dropped almost 4 per cent and Cap Gemini was down over 3 per cent. The car sector was firmer, with Peugeot Citroen boosted by a confident presentation to shareholders on Wednesday. One broker said that the auto sector might benefit from the British rate rise as a stronger sterling might translate into more revenue in francs.
Milan Mibtel: The Milan market closed slightly lower in lacklustre trade, drawing little, inspiration from the uninspiring opening on Wall Street. Telecom Italia was among the heaviest traded and closed down nearly 1 per cent after being over 1 per cent higher at one stage. The company said it still saw room for a deal with AT&T and Unisource.
Aeroporti di Roma was over 4 per cent higher while Pirelli was also well supported as investors took the view that the company was undervalued compared to its fibre-optic rival Ciena. Banca di Roma and BCI were marginally down in official trading - after the market closed Banca di Roma said that it had abandoned the idea of a merger with BCI.
