EUROPE REPORT: DaimlerChrysler dropped more than 6 per cent in intraday trade after the German automaker paid a heavy penalty for subsidising prices in an attempt to drive up sales volumes in the US.
Frankfurt DAX: 3,081.74 (+54.9); Paris CAC: 3,063.85 (+24.44)
The company warned that its Chrysler unit in the US would post a loss of about $1.17 billion 1 billion) in the second quarter, well below the $2 billion profits it expected some months ago.The automaker also reduced its full-year profit forecast and now expects 2003 operating profits of about 5 billion, compared with its previous target of 5.8 billion or more. The shares had recouped some of their losses by late afternoon, trading 2.5 per cent lower at €26.08.
The rest of the auto sector recovered from early losses. Rival BMW was 1.2 per cent firmer at 29.65 and Volkswagen, which saw US sales plummet 13.4 per cent in May, settled 2 per cent higher at 32.12.
Porsche, the luxury sports car maker, finished unchanged at €314 after US sales jumped 30 per cent in May, while France's Renault eased to 38.47.
The undoubted star showing in the banking sector came from HVB Group. The company's shares raced up 9.7 per cent to €13.55, boosted by reports that the bank expects to receive €1.1 billion from the sale of a stake in Bank Austria and had received numerous bids for its Norisbank consumer finance business.
Commerzbank was another big winner, its shares adding 3.2 per cent at 10.28 after the bank said it expected its retail banking division to record a profit in the second quarter. Italy's San Paulo IMI climbed 1.2 per cent to 7.87, responding to an earnings and recommendation upgrade by JP Morgan.
Bayer, the German pharmaceuticals and chemicals group, managed to shrug off some bearish news on its Aleve drug. Clinical trials showed the treatment does not slow the onset of Alzheimer's disease. The company's shares were 2.2 per cent higher at €18.42.
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