Parisian sentiment fails, Frankfurt stages rally

A disappointing performance on Wall Street and weakness in defence stocks dragged Paris 1.7 per cent lower, with the CAC-40 ending below the 4,000 mark at 3,985.49, down 66.83. Lagardere lost €1.02 at €37.48 while Thomson-CSF, down 83 cents or 2.7 per cent to €29.75, suffered as the planned merger of Aerospatiale and Lagardere's defence arm Matra threatened to leave CSF isolated.

Eurotunnel shed 9 cents or 6.8 per cent to €1.24 - following a 17.7 per cent rise on Tuesday - as take-over speculations subsided.

Frankfurt clawed back heavy early losses, and the Xetra Dax index, down 124 points at one stage, ended 74.69 lower at 4,820.42.

Deutsche Telekom, under regulatory pressure recently, fell steeply on a press report that its profits performance in 1998 had been far from resilient. The shares, the largest single component within the index, ended off €1.47 at €36.20 after touching a session-low of €35.62.

Deutsche Bank lost €1 at €47.95 despite a results statement suggesting net earnings for last year could have been well ahead of the consensus of broker forecasts.

Unsettled by a European Union probe into banks' foreign-exchange fees, Dresdner lost 89 cents at €32.60 and Commerzbank 23 cents at €25.09. Volkswagen, caught in a cross-fire between rising European car market share in January and worries about engineering strikes, came off €1.34 at €64.11. Diversified telecoms group Mannesmann, which puts out annual figures today, gave up €3.18 at €113.30.

Amsterdam moved lower for a third session, dipping 8.69 or 1.7 per cent to 514.15 on the AEX index, with heavy falls among financials and a shakeout at Royal Dutch leading the market lower.

Telecoms leader KPN was the day's heaviest casualty, falling €1.70 or 3.7 per cent to €44.70. Akzo Nobel came off €1.20 at €36 and Royal Dutch finished €1.10 lower at €37.40.

Helsinki tumbled as a poor showing by the Nasdaq weighed on telecom and high-tech stocks. The Hex index was down 154.64 or 2.6 per cent to 5,812.59. Heavyweight Nokia shed €3.70 to €116.80, while rival Sonera came back from a €15.55 low to end 4 cents lower to €16.01.

Milan closed 0.8 per cent lower despite a good showing by the banking sector. The Mibtel index was off 180 to 22,982.