European and London Stock Market

EUROPEAN: bourses were divergent in their movement. In PARIS, share prices remained in quite a tight range until employment data was released in the USA. Interest rate cuts in France and the UK did produce some gains but theses were wiped out when the employment news from the USA proved disappointing to the optimists. The CAC 40 index fell back to close the reporting period unchanged. Chemical and pharmaceutical stock Rhone-Poulenc, in a move to reduce its debt, announced that its health care business Rhone-Poulenc Rorer had agreed to sell its Fisons Rochester, USA, facility to the UK company Medeva (Marketletter June 10). The news pleased the market and R-P's share price rose. In FRANKFURT, share prices declined. Andrew Fisher, writing in the Financial Times, noted that after an impressive burst at the beginning of the year, the German stock market has stopped in its tracks. Some analysts believe that a correction may be around the corner and investors are being advised to hold back from purchasing new shares. With a weak German economy, economists are divided as to how quickly and how soon it will recover. Mr Fisher pointed out that one area of change is in the corporate arena, where companies are altering the way they treat shareholders and organise their activities. An example is Hoechst, which is undergoing intensive restructuring (Marketletters passim).

LONDON: equity investors were left cold by the interest rate cut announced during the reporting week. The employment report from the USA added to the market's grief and share prices tumbled. However, a rally occurred at the close, driven by UK producer data and US momentum. SmithKline Beecham rose on rumors of the US Food and Drug Administration moving on approval of its cardiovascular agent Kredex (carvedilol). Medeva advanced on its acqusition of the former Fisons US facility in Rochester, New Jersey, from Rhone-Poulenc Rorer (Marketletter June 10). It is seen as an excellent strategic move by analysts, which enhances earnings and lowers risk, particularly in relation to methylphenidate.