A broker downgrade for cyclicals managed to push Frankfurt lower on a day when investors also showed disappointment at the Bundesbank's failure to reduce interest rates. The benchmark Xetra DAX index slipped back through the 4,800 level to close electronic trading at 4,795.28, off 82.96 on the day.
Cyclicals fell steeply after Morgan Stanley Dean Witter took a sideswipe at the sector, downgrading MAN, Preussag and Thyssen and infecting sentiment across a broad swathe of manufacturing stocks. MAN led the rout, tumbling 37 deutschmarks or 6.2 per cent to DM491. Preussag fell DM35 to DM584 and Thyssen came off DM11.90 at DM297.10. Mannesmann lost DM5.40 at DM170.50.
Banks, a better market lately on hopes for an official easing in money costs at yesterday's Bundesbank meeting, moved lower. Dresdner fell DM2.53 or 4 per cent to DM66 and Commerzbank shed 70 pfennigs at DM50.20 ahead of next week's results.
Paris gave up 87.98 at 3,596.18 on the CAC-40 index in good volumes which lifted turnover to 13 billion francs. Sanofi was a rare firm feature, rising Ffr41 to Ffr901 following an upgrade to "strong buy" at Morgan Stanley Dean Witter. The latest cold douche of bad news from the oil sector, weak earnings from the Shell group, sent Total and Elf Aquitaine steeply lower. Elf fell Ffr30 to Ffr690 and Total Ffr48 to Ffr679.
France Telecom came off Ffr16.60 at Ffr365 on speculation that the government was set to sell off a further 12 per cent of the company, possibly as early as next week.
Zurich headed lower although many dealers welcomed the pull-back, saying that it was correcting an overbought market. The SMI closed 187.9 or 2.8 per cent lower at 6,557.5.
Swisscom, the beneficiary of a raft of positive recommendations in recent days, put on 11 francs to Sfr483 as ABN Amro weighed in with a six-month share price target of Sfr530.
Milan closed lower in thin trading, with the general index down 267 or 1.3 per cent to 20,542. Merloni closed up 772 lire to L9,800 after being suspended limit-up for the second consecutive day. Investors rushed to buy the shares after the government announced plans for an incentive scheme to encourage purchases of domestic appliances.
Helsinki retreated in tandem with Nokia and the Hex index fell 93.49 or 2 per cent to 4,478.83. Nokia lost 6.50 markka, or 1.4 per cent, to Fm461 on profit- taking. Raisio, the food group, declined Fm3.20 or 5.6 per cent to Fm53.70 on uncertainty over the US launch of its anti-cholesterol margarine, Benecol. The US Food and Drug Administration could stop the marketing of Benecol as a dietary supplement.
