Market Report - Europe

Frankfurt registered its disappointment with the Bundesbank's decision to leave interest rates unchanged and the Xetra DAX index slid 85.43 or 1.9 per cent to 4,449.12.

Deutsche Telekom remained under pressure for a second straight day, following a business magazine report that the company had cut its 1999 profit forecast. The shares lost 2.30 deutschmarks to DM46.80 in spite of Telekom's insistence that it had not made any forecasts.

Mannesmann, its major telecoms competitor, was a beneficiary of switching and an upgrade from Hypo-Vereinsbank. The shares closed DM4.20 higher at DM151.30.

Banks were hurt by the absence of a rate cut and Deutsche Bank lost ground for the first time in three days. The shares turned back from a four-week, intraday high to close DM3.50 lower at DM101.50. Hypo-Vereinsbank fell DM3 to DM137, while Dresdner, rumoured to be considering a takeover of Bfg Bank, lost DM1 to DM62.90.

Car stocks were weak after Daimler-Benz chief Mr Jurgen Schrempp was reported to have warned that the industry could slide into recession soon. Daimler lost DM4.45 to DM132.80, while BMW lost DM65 to DM1,076 as events at its Rover Group offshoot in Britain continued to generate more heat than light.

Paris lost early gains amid disappointment over the Bundesbank's failure to cut interest rates. Cap Gemini, the software company, gained 14 francs to Ffr759 on the back of the recent rally in US technology stocks. Higher sales and a lower-than-expected impact from the Asian crisis helped Remy-Cointreau gain Ffr0.50 to Ffr78.50.

Vivendi, the diversified utilities group, gained Ffr24 to Ffr1,246 following a newspaper interview with the chairman of SGE, which is 51 per cent owned by Vivendi. The interview contained a reiteration of earlier statements about the profitability of the construction group and SGE closed up Ffr16.90 at Ffr251.

Milan closed lower despite an earlier rally triggered by hopes of an imminent rate cut, and the Mibtel index fell 185 or 1 per cent to 19,352.

Olivetti, the most active issue of the day, was up 151 lire to L3,720. The shares jumped 7 per cent after its mobile-telephone affiliate Omnitel announced higher-than-expected third-quarter net profit of L264 billion.

Telecom Italia gained L59 to L11,478 after reports that chairman Mr Gianmario Rossignolo would be stripped of his executive powers at today's board meeting.

Profit-taking hit Banca di Roma, which fell L146 to L2,695. Compart rose L15 to L1,166 on heightening speculation around its sale of Fondiaria to Generali and merger with Montedison.