Consolidation name of the game in Frankfurt

Frankfurt saw a second day of consolidation, which left the Xetra DAX index 70.34 or 1.3 per cent weaker at 5,196.13.

Bank stocks were hard hit. Dresdner Bank led the retreat, losing #2.10 to #39.50 in spite of reassurance that its exposure to China's failed Gitic trust amounted to a "low double-digit million mark" figure.

However, traders said there were concerns the banks could be open to further such liabilities. Deutsche Bank gave up #1.68 to #53.92 and Commerzbank remained under pressure, losing 23 cents to #27.17 after Monday's strong sell-off.

Deutsche Telekom edged up 28 cents to #32.68, boosted by the prospect of further restructuring in the European telecom sector. Mannesmann put on 1.38 to 113.59.

Car stocks were weak on worries about slowing sector growth. VW lost #2.80 to #73.60 in spite of a 7.5 per cent increase in 1998 group vehicle deliveries. BMW lost #27 to #682 and Daimler-Chrysler fell 80 cents to #91.

Paris turned lower with financials under pressure on concerns over their exposure to China's failed Gitic trust. The CAC-40 index, which picked up to an early 4,213.67, finished 101.20 lower on the day at 4,100.70.

Computer services group Cap Gemini was the main drag on the index, falling #20 or 12.8 per cent to 136 after a Morgan Stanley downgrade. Other analysts agreed that the group's valuation looked high after sharp gains at the start of the year. The shares have been on a downward trend since peaking at #162.90 on January 6th.

Among financials, CCF lost #6 or 7.6 per cent to #73 after Cheuvreux confirmed that it had cut its recommendation on the bank.

Societe Generale lost #4.20 or 2.7 per cent to #152.90 in spite of reassurance that its Gitic exposure, at $25 million (#17.06 million), was nowhere near its exposure to Russia and Indonesia.

Imetal shot up 11.6 per cent as the stock was re-quoted after its bid for English China Clays closing #10.40 better #at 99.80.

Milan drove the Mibtel index 2.2 per cent lower, although individual stocks put in strong performances. The index's 536-point fall to 24,119 reflected concerns about the Brazilian economy and the strength of the dollar. Support for the market, which finished 33 above its session low, came from buying of selected blue chips. Telecom Italia rose 10.4 cents or 1.3 per cent to #8, Eni, the energy group, gained 5.4 cents to close at #5.83 and Alitalia, the airline, closed 7.5 cents or 2.2 per cent higher at #3.52.

Amsterdam fell victim to nerves about the effects of emerging markets problems on Dutch company results. The AEX index fell 9.53 or 1.7 per cent to 536.24, adding to the 2.4 per cent decline the market suffered on Monday.

(# signifies the euro)