European stocks drop

September 29, 2009

, LONDON, Sept 29 – Europe\’s main stock markets retreated on Tuesday despite strong gains in Tokyo and overnight on Wall Street.

The FTSE 100 index fell 0.41 percent to 5,144.60 points in midday London trading.

Frankfurt\’s DAX 30 dropped 0.59 percent to 5,702.71 points and in Paris the CAC 40 slid 0.48 percent to 3,806.61 nearing the half-way mark.

The DJ Euro Stoxx 50 index of top eurozone shares shed 0.44 percent to 2,886.27 points.

"European markets traded negative as investors paused for breath after posting healthy gains yesterday," said City Index market strategist Joshua Raymond.

"There is certainly an element of apprehension as to whether we can push on from these levels and whether yesterday\’s large gains were justified."

Europe\’s main stock markets had rallied strongly on Monday, boosted by an election win for a business-friendly coalition in Germany and corporate takeovers in the United States, dealers said.

Xerox Corp. will acquire Affiliated Computer Services for about 6.4 billion dollars, while Abbott Laboratories said it would buy the pharmaceutical unit of Belgium-based Solvay for about 6.6 billion dollars.

The news helped Wall Street shares to roar back after a poor showing last week, as the Dow Jones Industrial Average climbed 1.28 percent to end at 9,789.36 points.

Tokyo\’s benchmark Nikkei-225 index closed up 0.91 percent to 10,100.20 points on Tuesday, helped by the overnight US rally and easing concerns over the recent strength of the yen, which hurts exporters, traders said.

In Europe on Tuesday, French banking giant BNP Paribas said it would raise 4.3 billion euros (6.3 billion dollars) of new capital to repay state rescue funding starting in October, several months ahead of schedule.

BNP Paribas, the first French bank to re-pay the state, said it no longer needed the support because the landscape for banking and profits had improved. It said that the government would earn a significant return on the deal.

BNP\’s share price climbed 2.49 percent to 57.98 euros following the announcement.

In London, Compass Group was a rare strong riser amid the profit-taking, winning 2.64 percent to 369 pence. The world\’s biggest caterer on Tuesday said that it had performed well in the fourth quarter of its 2008/2009 financial year despite the poor economic environment.

The firm forecast that the challenging environment would push revenues even lower in the coming months — but the global recovery would support higher demand for its services.


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