Early losses in Frankfurt were translated into gains after the Bundesbank and 10 other central banks across Europe cut interest rates. The Xetra Dax index picked up from a low of 4,592.07 to close 100.14 higher on the day at 4,812.34.
Among the large-cap stocks, Linde, the engineering group often described as the bellwether of the German economy, benefited most from the cut in the Bundesbank's key repo rate to 3 per cent. The shares surged DM105 or 11.6 per cent to DM1,007.50, its highest since mid-September.
Another big winners was Deutsche Telekom, which put on DM2.70 to DM49.80. Banks and the chemicals companies also gained on the rate cut. Deutsche Bank rose DM4.35 to DM99.90.
Siemens was a weak spot, losing DM1.55 to DM111 after its eagerly awaited news conference produced no fresh news on further restructuring plans. BMW fell DM23 to DM1,119 as questions were raised over restructuring at its Rover subsidiary.
Paris celebrated interest rate cuts with a volatile afternoon session. The CAC-40 index ended up 65.76 at 3,715.67 after trading within an arc of more than 170 points.
Acquisition news lifted retailer Pinault-Printemps, which gained FFr49 at FFr960, and the better dollar helped lift Renault FFr9.90 to FFr261. Elf-Aquitaine and L'Oreal, effectively the two parent companies
backing the merger of Sanofi and Synthelabo, added FFr16 to FFr676 and FFr215 to FFr3,519 respectively. Sanofi gained FFr16 at FFr946, but Synthelabo eased FFr9 at FFr1,190. Amsterdam rallied strongly, with the AEX index gaining 25.07 to 1,052.75 in good volume, a tendency firmly reflected by the 17.4 million shares traded in ABN Amro.
Financials led the bounce. ABN gained Fl 1.10 to Fl 36.20 and Aegon Fl 7.10 at Fl 199.50. Philips, included in Deutsche Morgan Grenfell's Focus buy list, jumped Fl 4.50 to Fl 121.80 and there was good demand for publishers VNU and Wolters Kluwer after a profits warning from Elsevier sparked sector switching. VNU rose Fl 4.50 to Fl 67 and Kluwer Fl 12.90 to Fl 348. Elsevier, which warned that earnings for this year would fall short of forecasts, lost 80 cents at Fl 23.40.
Milan rose on news of interest cuts by the Bank of Italy. The Mibtel index closed 356 or 1.7 per cent higher at 21,769 after the central bank cut its discount rate by half a percentage point to 3.5 per cent. San Paolo- IMI, the bank, rose sharply on reports that it planned talks before Christmas with Credit Commercial de France to discuss a link-up. San Paolo ended L1,086 higher at L28,113.
