Investors step back and wait for US inflation data

The proximity of tomorrow's US inflation data kept investors on hold in Europe and most markets edged lower in narrow trading.

The FTSE Eurobloc 100 index gave up 0.5 per cent at 1,066.05. The FTSE Eurotop 100 shed 0.3 per cent at 3,026.62 and the broader FTSE Eurotop 300 lost a similar amount at 1,309.70.

Frankfurt traded narrowly, with brokers reporting slack trading volumes as investors stayed out of the market ahead of the next instalment of US inflation data. In spite of Friday's benign producer price index for May, US bonds have stayed weak and yesterday there was no lack of ensuing nervousness in the run-up to the month's consumer price index.

The upshot was thin trading conditions and a modest decline for the Xetra Dax index, which ended little changed, off 4.49 at 5,291.52.

Allianz came off steeply in early trading. Positive weekend comment on the Dasa-CASA alliance sent Daimler-Chrysler ahead, lifting the shares 21 cents to €84.50.

A UK press report suggesting Preussag was set to expand its tourist arm with a takeover bid for Kuoni, the Swiss travel operator, elicited a denial from the German group but left the shares 53 cents lower at €47.77.

Logistics group Stinnes made a less than sparkling debut, closing at €15.35, comfortably above the €14.50 listing price but outside the bookbuilding range of €15.50 to €18.50.

Paris ended 13.44 lower at 4,372.39 on the CAC 40 index in modest volumes.

A fresh burst of takeover talk, sparked by the £6.7 billion (€10.4 billion) US bid for Asda of the UK, sent Casino up €1.65 at €87.45. Canal Plus stayed in demand, adding €8.30 at €296.5 for a two-day improvement of more than 4 per cent.

Michelin shed €1.15 at €41 after Paris broker Cheuvreux downgraded the stock from add to hold. Elsewhere in motor components, Valeo came off €2.80 at €76.20.

Renault, a strong market last week on hopes for a strong start to the group's merger with Nissan following a March quarter surge for the Japanese economy, ran into profit-taking, dipping €1.30 to €40.50.

Zurich pulled back although speculative gains in Novartis limited the overall market's losses as investors held back ahead of the US consumer price data. The SMI index finished 23.8 weaker at 7,030.8.

Novartis put on 39 Swiss francs to SFr2,357 as speculative demand was spurred by a weekend press report it had held merger talks with Britain's SmithKline Beecham. Novartis declined to comment on rumours as a matter of principle. Certificates in rival Roche eased SFr85 to SFr16,665.