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Europe edgy ahead of Powell


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LONDON, England (CNN) -- European bourses reversed early losses, but trading was edgy midday on Wednesday as Washington prepared to lay out its case for a possible war with Iraq.

London's FTSE 100 rose 0.5 percent to 3,608.6 and Frankfurt's electronically traded Xetra Dax inched up 0.3 percent to 2,587.06, while the CAC 40 blue chip index in Paris dipped 0.3 percent to 2,854.93.

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, edged up 0.1 percent with the tobacco, telecom and mining sectors, offsetting losses in the media, pharmaceutical and computer sectors.

The dollar fell to four-year lows against the euro and gold rose to fresh six-year highs as investors sank money into so-called safe havens. The euro hit $1.0935 -- nearly half a percent above the U.S. close in early trading and was last trading at $1.0922.

And gold was trading at $386.75 an ounce, compared with $378.65 in late New York trading.

U.S. Secretary of State Colin Powell is due to address the U.N. Security Council later on Wednesday, setting out the reason's why Washington believes it is right to disarm Iraq with force. (Full story)

"Everyone's very nervous ahead of Powell's speech, they seem to be expecting a war to kick-off soon,'' Andrea Williams, head of European equities at Royal London Asset Management, told Reuters.

"War fears against a backdrop of mixed European economic data and broadly weaker-than-expected corporate earnings are weighing on markets,'' she said.

A raft of poor earnings reports also conspired to undermine the markets.

Switzerland's Adecco sank 8 percent to 39.45 Swiss francs after the world's largest employment services company said core profit slumped by a worse-than-expected 48 percent to 362 million Swiss francs as the economic slowdown reduced demand for its workers.

Vivendi Universal (PEX), Europe's biggest media company, fell 4 percent to 14.70 euros after Deutsche Bank cut its price target on the stock to 13 euros from 16 euros.

And Aventis (PAVE) fell 4.7 percent to 43.50 euros after the Franco-German drugmaker met analyst expectations for 2002, but slashed its earnings-per-share growth target for 2003 to reflect the competitive threat to its top allergy drug Allegra in the United States.

But some early fallers recouped losses. Commerzbank (FCBK), Germany's third-largest bank, was little changed, after earlier falling 3.4 percent in Frankfurt after the bank posted its first-ever full-year loss and said it was impossible to say how much profit it would earn in 2003. (Full story)

BNP Paribas (PBNP), France's biggest bank, posted slightly better than expected results -- but the company warned geopolitical, economic and financial troubles in 2002 seem set to carry over into 2003. It stock slipped 0.25 percent to 36.50 euros in Paris. (Full story)

Vodafone (VOD), the world's biggest mobile phone operator, rose 3.4 percent to 112.5 pence after saying it was in talks with several potential buyers to sell its fixed-line operations in Japan. (Full story)

The AEX index in Amsterdam and Milan's MIB30 index were up 0.6 percent each, while the SMI in Zurich rose 0.2 percent.

In the U.S. on Tuesday, war jitters took their toll ahead of Powell's speech.

The Dow Jones industrial average fell 1.2 percent, or 96.53 points, to 8013.29 and the Nasdaq composite slipped 1.3 percent, or 17.64 points, to 1306.15, while the Standard & Poor's 500 index sank 1.4 percent, or 12.12 points, to 848.20.

Wall Street was expected to open lower later on Wednesday. S&P 500 index futures fell 3.5 points to 845.8 on the Globex trading system, while fair value, a measure that takes account of interest costs and dividend payments, was calculated at 847.06.


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