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Eurostocks strong as war looms
LONDON, England (Reuters) -- European shares were stronger on Wednesday afternoon, poised to clock up a fifth straight session of gains as hopes for a swift and decisive war in Iraq were spurred by reports of U.S. troop movements. French drinks group Pernod-Ricard was among the top advancers in the broad rally, with German drug group Bayer a standout in the blue-chip decliners' column. Allianz gained five percent as it braced for a dramatic overhaul of its ailing Dresdner Bank division on Wednesday, a day after a top-level management shake-up in which Dresdner's chief was replaced by a rival from Deutsche Bank AG. By 1448 GMT, the FTSE Eurotop 300 index was up 1.5 percent at 792.96 points, bringing the pan-European blue-chip benchmark's gains to around 16 percent over the past five days on the prospect of a short war. On Wall Street, the Dow Jones industrial average rose 0.2 percent in early trade, as the Nasdaq Composite eased 0.6 percent. Sources earlier said that U.S.-led forces had moved into the demilitarised zone that straddles the Iraq-Kuwait border, apparently in preparation for an imminent attack on Iraq. Strategists said the report was boosting sentiment as it helped lift uncertainty about the timing of a war in Iraq that has dragged stock markets sharply lower in recent months. Even as the countdown continues on Washington's ultimatum to Iraqi President Saddam Hussein to leave the country by 0115 GMT on Thursday morning or face war, investors started to size up the post-war prospects for equities. "Even if we assume the military campaign in Iraq is successful, there is still so much uncertainty. You have occupation in Iraq without U.N. support and the risks of terrorist attacks clearly rising," said Rupert Thompson, global equity strategist at E+Trade Securities. Pernod perkyFrench drinks group Pernod Ricard rose seven percent, lifted by a forecast-beating 15 percent rise in 2002 net profit thanks to a year's help from its new Seagram brands, but the group gave no 2003 guidance, citing geopolitical uncertainty. Europe's airline and aerospace stocks slid on fears their credit ratings may be cut because war would weigh on demand, and European software shares sagged after U.S. software group Oracle late on Tuesday reported key software sales fell short. Europe's largest software house Germany's SAP fell 3.3 percent, while France's Business Objects dropped 3.8 percent. German drug group Bayer slid five percent, giving back some of its 40 percent advance in late trade on Tuesday after a U.S. court's decision to dismiss a lawsuit against the group's recalled anti-cholesterol drug Baycol. Oil stocks rose as the price of crude rallied after falling for four straight sessions. BP was 1.3 percent firmer, Royal Dutch was up 1.5 percent and Shell was 1.3 percent stronger. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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