Frankfurt hit hard by early setback on Wall St

Wall Street's early losses weighed heavily on European sentiment and bourses moved lower for the third day running. The FTSE Eurobloc 100 index came off 0.7 per cent at 1,065.97 to extend its decline since the close on Monday to 2.7 per cent. The FTSE Eurotop 100 index lost 0.8 per cent at 2,926.49 and the broader FTSE Eurotop 300 index shed 0.9 per cent at 1,279.10.

Frankfurt bore the brunt of the early setback on Wall Street. The Xetra-DAX index fell 75.14, or 1.4 per cent, to 5,220.29. News that DaimlerChrysler is to merge its Dasa operations with Aerospatiale Matra of France sparked a flurry of buying across the European defence sector. DaimlerChrysler, which is currently in the process of absorbing Spanish defence group CASA, ended €1.20 higher at €69.20.

SAP had another unhappy session as the sellers maintained their pressure following Wednesday's profits warning. The shares came off €13.00 at €398 for a two-day decline of 9 per cent.

Paris tracked the uneasy trend on Wall Street and finished 19.22 lower at 4,583.63 on the CAC 40 index. Lagardere ended a volatile session little changed after hitting a fresh high for the year of €44 on the news that DaimlerChrysler's Dasa was to merge with Aerospatiale-Matra in which Lagardere is a major shareholder. The shares, which ran into severe profit-taking towards the end of the day, eventually settled at €40.15, up a bare 15 cents. Aerospatiale-Matra closed 87 cents better at €21.74.

Amsterdam shed 4.75 at 547.25 on the AEX index to lag modestly most leading European bourses. Financials were relatively resilient with ABN-Amro adding two cents at €21.96 and Fortis gaining 68 cents at €31.25. But heavier fallers included Philips, which shed €1.70 at €90.40.

Zurich called a halt to two days in reverse as investors absorbed better than expected nine-month sales figures from Roche and a firm performance during the session in Novartis. The SMI index finished flat, up just 0.5 at 6952.8. Roche certificates settled to close unchanged at SFr17,950 (€11,285) after the group unveiled a 9 per cent rise in nine-month sales. Novartis put on SFr20 to SFr2,234 (€1,404).