Financials depress DAX as Paris gains a little

Shares in Frankfurt continued to lose ground under the impact of weak financials and a bad day for industrial heavyweight Daimler-Chrysler.

With the euro reaching down to another record low and bonds again on edge, financials weakened. Sentiment was also dented by the proximity of tomorrow's decision on interest rates for the European Central Bank. The Xetra DAX index was off 0.9 per cent at 7,146.49 at 6.30 p.m. German time.

Deutsche Bank fell €4.05 or 4.1 per cent to €94.19 and Dresdner Bank came off €1.18 at €51.07. Among insurers, Munich Re lost €1.85 at €316.40.

Daimler-Chrysler fell heavily on negative broker comment. Deutsche Bank has cut its earnings forecast for the motor giant by 12 per cent for 2000 and is deeply concerned about the trend of operating margins in 2001.

The shares fell to €56.05 in early trading before closing off €1.52 at €56.70.

There were heavy falls among selected other old economy stocks. BASF shed 72 cents at €41.33 and Karstadt Quelle 94 cents at €35.41.

Paris spent the day hovering near neutral but ended a little stronger as the Nasdaq opened in positive territory, although it was not technology stocks that showed the best gains. The CAC-40 index added 0.3 per cent to 6,697.8.

There was evidence of sectoral rotation favouring drug companies. Aventis, formed last year by the merger of Rhone-Poulenc and Hoechst of Germany, rose 3.8 per cent to €84.25 and Sanofi-Synthelabo was up 3.4 per cent to €57.10. Their share prices are seen as attractive compared with new economy stocks, which may be harder hit by any economic slowdown.

Amsterdam moved lower, shedding 5.29 at 682.31 on the AEX index after heavy falls for selected heavyweights.

ABN-Amro fell steeply in heavy trading volume of 21 million shares as book-building for the sale of 100 million shares got under way. Rival financial services group ING is selling the stock at €27.19 in order to reduce its stake in ABN to 10 per cent. ABN shares fell 88 cents or 3.2 per cent to €26.31.