US rate uncertainty casts long shadow over shares

European bourses were back under the influence of US interest rate uncertainty yesterday and shares tracked bond markets lower.

Frankfurt unwound all of Monday's gains to close with the Xetra DAX index off 86.43 at 5,000.87. Deutsche Bank was a casualty of interest rate uncertainty, slipping €1.62 to €59.49.

In a nervous market ahead of today's interim results statement, utility Veba shed €1.22 at €58.73.

Among chemicals, Henkel improved three cents to €67.02 on half-year results while Schering added €3.10 at €104.80 for a two-day gain of 8.2 per cent following a broker upgrade. Paris lost 47.55 to 4,245.35 on the CAC-40 index in spite of another strong showing for France's oil heavyweights. Boosted by hopes of a compromise deal in their take-over tussle and news of strong results from British rival BP Amoco, Elf Aquitaine added €3.40 at €167.20 and TotalFina €2.70 at €122.30. Cement leader Lafarge fell foul of broker downgrades with Goldman Sachs and Morgan Stanley advising clients to take profits. The shares came off €5.00 at €96.50. Cosmetics group L'Oreal fell €26.00 to €560.

Amsterdam met with steady selling of financials and the AEX index ended off 6.60 at 536.79 after a session of narrow trading. ABN Amro and ING both fell more than 3 per cent as investors continued to fret about the outlook for US rates. The former lost 60 cents at €19.35 and ING €1.40 at €44.35.

Zurich fell to a low for the year as a weak showing in financials cancelled out the impact of a 3.8 per cent rise in merger candidate Alusuisse. The SMI index fell 105.1 to 6,616.7.

Helsinki sank 4.1 per cent as the forestry sector ran into profit-taking and Nokia gave ground. The Hex index lost 299.14 to 7,059.82.

Among forestries, UPM-Kymmene fell €2.80 or 7.8 per cent to €33.10 and Stora Enso was 40 cents lower at €12.65 as their quarterly results proved in line with expectations. Analysts said UPM was ripe for profit-taking after the gains which followed speculation about a merger with US paper maker Champion International. Nokia slid €4.35 to €73.75, hurt by US rate concerns and negative sentiment.

Stockholm was lower but gains in the motor sector limited losses. The general index finished 41.18 lower at 3,694.24. Telecoms led the retreat on the back of overnight falls in the US sector. Ericsson finished 10.50 Swedish krone lower at SKr246 (€27.90).

Truck and bus maker Volvo put on SKr1.50 to SKr232.50 (€26.37) while Scania was SKr1 higher at SKr307 (€34.82). Volvo, which on Friday announced a take-over of Scania, said yesterday that it had increased its stake in the company.