US figures give Frankfurt a boost

European markets reversed early losses after data showed that US manufacturing activity grew at a slower pace than expected in July, easing concerns about a rise in US interest rates.

The FTSE Eurobloc 100 index closed 3.18 weaker at 1,043.28. The FTSE Eurotop 100 was 2.57 higher at 2,924.20 while the broader FTSE Eurotop 300 settled 2.39 higher at 1,276.19.

Frankfurt erased sharp early losses to close higher as the day's US data calmed worries over the prospect of a US rate rise.

The Xetra Dax index, which fell below 5,000 points for the first time since early June, finished 27.63 higher at 5,129.50.

Veba put on €1.60 to €58.60 after Friday's 3.9 per cent jump, which followed speculation about a merger with Viag. Shares in Viag overcame an early tumble to €458.10 to close €4.09 higher at €478.99. The share soared 10 per cent higher on Friday. Against the trend, national carrier Lufthansa dropped 74 cents to €16.49 after the private German bank Merck Finck downgraded the stock saying its business was suffering from yield pressure.

Sportswear maker Adidas-Salomon was 45 cents weaker at €84.10 even though its lower first-half earnings still came in ahead of expectations. The company also repeated its expectation that earnings per share for the full year would grow by 10-15 per cent.

HypoVereinsbank, a rare Dax gainer early in the session as WestLB upgraded the stock, finished 10 cents weaker at €52.50. The share has been under recent pressure from downgrades when the group revealed fresh problems in its real estate financing division.

DaimlerChrysler finished €69 weaker at €70.51, extending falls last week following weaker-than-expected first-half earnings.

Paris rallied strongly to close almost flat after falling more than 2 per cent in early trading. The CAC-40 index ended 4.19 or 0.1 per cent lower at 4,377.87. Banque Nationale de Paris was the most heavily traded stock as its takeover dispute with Societe Generale and Paribas entered its final week. BNP has made hostile bids for the other two in an attempt to prevent them merging.

BNP closed unchanged at €77 after about 1 per cent of its share capital changed hands. SocGen rose 90 cents or 0.5 per cent to €176.50, while Paribas dropped €5 or 4.7 per cent to €101.

Several cyclicals performed strongly, although traded volumes were low. Schneider, the electrical goods maker, climbed €3.35 or 5.9 per cent to €60.50, while Saint-Gobain, the glass and building materials group, finished €8.50 or 5 per cent higher at €178.

Sanofi-Synthelabo, the drugs group, fell victim to profit-taking after its 2.9 per cent rise on Friday. The shares ended at €37.25, off €1.60 or 4.1 per cent.