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Second day of big gains in Europe
LONDON, England -- European share prices stormed ahead for the second straight day on Friday to clock up their best back-to-back gains in years, led by a rebound in insurance stocks and a healthier Wall Street. "I would not say we have had fantastic news in the last two days but there is a little bit of an opening in the Iraqi situation and things may be getting a bit better there," Teun Draaisma, a European strategist at Morgan Stanley, told Reuters. The Paris CAC 40 closed up 7.25 percent at 2,740.01 and the Brussels Bel 20 up 7.23 percent at 1,679.47. London's FTSE 100 ended 3.30 percent ahead at 3,601.8 while Frankfurt's electronically traded Xetra DAX closed up 2.08 percent or 48.88 points to 2,403.19. The AEX index in Amsterdam closed ahead 7.11 percent and Milan's MIB30 index gained 3.09 percent. In Zurich the SMI rallied 6.03 percent. Some investors such as hedge funds were being forced to cover short positions after being caught out by the continued rallying, Draaisma said. Crude oil prices slumped in anticipation that a U.S. war against Iraq could start soon and finish quickly, stoking optimism in Europe's stock market that has been spooked for months by the build-up to a possible war. Dealings have been solid during the two-day rally. "The good volumes suggest this could carry on a bit longer," John Hatherly, a fund manager at M&G, told Reuters. "However, two days of gains do not prove anything apart from the fact the market was technically oversold in the short term. The key is whether this turns into a wholesale rally, and what determines that is if we get newsflow that is better," Hatherly said. All eyes turned to a summit on Sunday when the United States, Britain and Spain look to a "final pursuit" of a U.N. resolution on Iraqi disarmament. (Full story) Many investors see hostilities starting soon in Iraq, lifting some of the uncertainty that has plagued markets and triggering the week's extreme volatility. Among the top advancers, in the insurance sector Swiss Re rose 18.3 percent to 64.50 Swiss francs, while German rival Munich Re gained 14 percent to 78.36 euros. France's Axa jumped 17 percent to 12.06 euros. On the negative side the DAX's rises were trimmed by German drug group Bayer. Its shares fell again on worries that legal costs for the recalled drug Baycol could lead to damages on a scale similar to long-running asbestos suits against industrial companies in the United States. Bayer was down three percent at 10.54 euros. Some defensive shares such as utilities and tobacco fell as investors shifted money into battered sectors like technology and media. French-Belgian bank Dexia rose 11 percent to 9.05 euros in Paris after the group reported in line results. However, the bank joined the ranks of companies declining to give an outlook given the current volatile market conditions. Swiss drugs giant Roche Holding rose 5.5 percent to 79.40 Swiss francs after the group said it expects its HIV drug Fuzeon to win European Union approval early in the second quarter of 2003 after U.S. regulators backed it on Thursday. (Full story) Investors largely ignored the day's patchy economic numbers as momentum remained on an upward trend in the stock market, though analysts warned that fundamentals could not be ignored for long even if the Iraq crisis is resolved soon. The usually closely-watched University of Michigan's preliminary U.S. consumer sentiment index for March fell to 75, a decade low, against expectations of 77.6.
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