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Tech stocks lead European rally
LONDON, England (CNN) -- European markets rallied back on Wednesday, led by technology and insurance stocks, despite an early retrenchment on Wall Street that initially took the wind out of investors' sails. London's FTSE 100 rose 2.8 percent to 3,905.2 and the CAC 40 blue chip index in Paris gained 4 percent to 2,940.84, while Frankfurt's electronically traded Xetra Dax was up 2 percent to 2,922.54 in late trading (the German market was set to close at 1800 GMT). The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 3.1 percent, with the information technology and insurance sub-sectors leading the gains. But despite the strong performance by European markets -- coming in the wake of a big Wall Street rally on Tuesday -- most analysts were not convinced that stocks had hit bottom and were on the road to recovery. "I can't really see why the long-term downtrend should change. There's still too many worries over the earnings outlook, the economy, Iraq and so forth," David Thwaites, pan-European equities strategist at BNP Paribas, told Reuters. Among the top movers on Wednesday was France Telecom (PFTE), which jumped 10.2 percent to 8.43 euros after corporate trouble-shooter Thierry Breton was named as the new chairman and chief executive of struggling phone company. (Full story) Vodafone (VOD), Europe's biggest mobile phone operator, rose 7.1 percent to 87.17 pence. On Wednesday, Reuters quoted sources as saying the group's 13.5 billion euros ($13.3 billion) bid for 85 percent of France's Cegetel was still on track. (Full story) Nokia, the world's biggest mobile phone maker, added 5.9 percent to 14.62 euros while rival Ericsson surged 17.5 percent to 4.23 Swedish crowns. Computer-related stocks gained momentum following Dell Computer's announcement after the close of trading on Tuesday that it was raising its sales outlook. Infineon Technologies (FIFX), Europe's third-largest chipmaker, was up 5.8 percent to 6.18 euros in late Frankfurt trading and Philips Electronics, Europe's biggest consumer electronics company, gained 6.4 percent to 15.85 euros. Cap Gemini (PCAP), the continent's biggest computer services company, added 2.7 percent to 15.32 euros. The battered insurance sector made strong gains. Axa (PCS), Europe's second-largest insurer, rose 10.7 percent to 11.20 euros and UK insurer Aviva (AV) added 5.5 percent to 395.20 pence. Meanwhile, Credit Suisse, which notched up big gains earlier in the session, fell 0.7 percent to 27.90 euros. On Wednesday, Switzerland's second-largest bank pumped another 2 billion Swiss francs ($1.35 billion) into its ailing Winterthur insurance business to enable it to meet claims. (Full story) ARM Holdings (ARM), Europe's biggest chip designer, plunged 63 percent to 47.44 pence after the company said third-quarter profits would probably halve compared to the previous three months. (Full story) Germany's biggest commercial broadcaster ProSiebenSat.1 was down 7.2 percent to 5.82 euros in late Frankfurt trading after it cut its full-year earnings forecast by 20-30 percent, saying it expected a further decline in the television advertising market in 2002. (Full story) British oil giant BP (BP) shares rose 1.6 percent to 440.1 pence, after it lowered its growth targets for this year as tropical storms and other technical problems cut into already weaker production levels. (Full story) The AEX index in Amsterdam was up 4.1 percent and Milan's MIB30 index gained 2.3 percent, while the SMI in Zurich advanced 2.8 percent. In the U.S. on Wednesday, stocks beat an early retreat after a warning from Dow Chemical sparked a selloff in the broader market, while techs slumped among bearish calls on chipmakers and software stocks. Dow Chemical (DOW), the country's largest chemical company, warned of flat earnings in the third quarter compared with expectations of an improvement in the bottom line. (Full story) Merrill Lynch cut its 2002 and 2003 capital spending growth forecast and slashed estimates on a host of chipmakers, saying it believed the semiconductor companies would be less profitable given the current industry environment. Compounding concerns over the tech sector, UBS Warburg cut its revenue and price target for Cisco Systems (CSCO), the No. 1 network equipment maker, citing weakness in information technology spending. At 1415 GMT, the Dow Jones industrial average was down 98.35 points to 7840.44, while the Nasdaq composite was 12.92 points lower at 1200.80 and the Standard & Poor's 500 index lost 8.68 points to 839.23. (Full story)
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