THE euro fell back in the foreign exchanges yesterday, but the "Lafontaine effect" was a positive factor for German equities, driving Frankfurt up to within a whisker of 5,100 on the Xetra Dax index at one stage.
Insurers and power utilities led the rally. Allianz and Munich Re both jumped more than 12 per cent and RWE and Veba were also in demand. Allianz ended €38.40 higher at €306 after touching a session best of €308.90. Munich Re added €22.40 at €204.40. RWE and Veba rose €5.20 to €47.20 and €4.30 to €52.50 respectively.
At the close, the Xetra Dax was up 245.69 or 5.1 per cent at 5,031.06, its best single-session gain since January 4th when the launch of the euro saw the benchmark advance 283.80.
Paris ended lower, partly hindered by a dramatic swing in sentiment at BNP, which fell back from a peak of 85.20 to close off 3 at 80. The CAC40 index ended off 9.35 at 4,175.03.
Oils also reversed recent gains with Total slipping €4.50 at €106.5 and Elf Aquitaine off €4.40 at €114.5. Thomson-CSF, a strong market in early trading following an upbeat management statement, finished €1.48 lower at €28.02.
Renault rose 83 cents to €35.83 on revived speculation that the motor giant was poised to take a sizeable stake in Nissan of Japan.
LVMH pushed higher, adding €13 at €223.2 amid talk that peace could shortly break out in the bid battle for fashion label Gucci.
Amsterdam took in a bounce for chemicals leaders Akzo Nobel and DSM and further upward progress for market heavyweight Royal Dutch, which took its cue from a strong oil price. Akzo gained €1.60 or 5.2 per cent at €32.60 and DSM €1.90 at €77.40. Royal Dutch improved 45 cents at €46.15 in spite of a downgrade to sell from Commerzbank.
Milan extended its losses in late trade to close lower as Wall Street's early performance failed to provide much inspiration. The Mibtel index lost 381 to 24,713. Telecom Italia traded lower in the afternoon and fell even further after a conference call late in the day for US and European fund managers. Telecom lost 2.7 per cent to €9.52 while Olivetti turned back from €2.96 to finish 0.8 per cent higher at 2.89.
Madrid gave up early gains to close easier and the Madrid General index finished 7.63 lower at 896.76.
Tabacalera was one of the losers, falling 62 cents to 20.24 after Thursday's 8 per cent rise. The fall followed comments by Seita of France that there were no plans at present for a merger, although such a move was possible. In Paris, Seita was 1.95 higher at 61.
