A rally in US cyclical stocks sparked a similar shift in Europe, with heavily weighted growth stocks selling off and investors piling into cheaper value issues. Growth sectors were weaker across the board, with the IT sub-index of the FTSE Eurotop 300 down 4.3 per cent.
Mining, forestry and paper stocks topped the list of gainers. Chemicals were also strong with DSM and Akzo-Nobel in the Netherlands each rising more than 8 per cent. The FTSE Eurobloc 100 index, covering leading companies in the euro zone closed 6.53 or 0.6 per cent lower to 1,055.70. The broader FTSE Eurotop 300 index closed 6.57 off to 1,293.39.
Frankfurt spent most of the session in negative territory but bounced gently off a low of 5,142.80 to finish with the Xetra Dax index up 2.96 at 5,189.72. Telecoms were active following a downbeat trading statement from Deutsche Telekom. This sent the market heavyweight down 3.24 or 7.9 per cent to 38.10 and cast a deep cloud over Mannesmann, which lost 7.12 at 119. There was greater resilience in the Neuer Markt where MobilCom added 1.69 at 211.80.
Paris ended weaker for the second day running, as investors sold off their holdings of growth stocks to switch into cyclical issues. The CAC-40 was 38.62 or 0.9 per cent lower to 4,310.64, lifted from intra-day low in late trading. Traders said the rush into cyclicals was sparked by the better global economic outlook and a slowing merger and acquisition news flow in growth sectors.
Traditional value plays were among the main gainers, with Saint- Gobain up 1.90 to 158.90 and Schneider adding 2.50 or 4.6 per cent to 57.20. Air Liquide was up 8.80 or 6.2 per cent to 149.80.
Amsterdam ended modestly lower with heavy falls for Philips and Unilever overriding another session of strong gains for chemicals. The AEX index ended off 1.40 at 542.20. In chemicals, the rush by investors to climb aboard the cyclicals bandwagon sent Akzo Nobel up 3.15 at 37.40 and DSM ahead 7 at 88 - a two-day advance of more than 13 per cent in each case.
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