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Europe climbs on troop reports
LONDON, England -- European shares clocked up sharp gains after Kuwaiti sources told Reuters that U.S.-led forces had moved into the demilitarized zone between Iraq and Kuwait. The report, which has not been confirmed by CNN, triggered talk that war with Iraq was about to start. Iraqi President Saddam Hussein has less than 24 hours to leave the country along with his sons and senior officials before facing the threat of a U.S.-led war. (Full story) Investors are betting on a quick fight with little resistance from Iraq's army. "This move by U.S.-led forces shows war is only hours away and is removing more of the uncertainty over the timing of conflict from the markets," Robert Kerr, a European equity strategist at Bank of America Securities, told Reuters. At 1139 GMT, the FTSE Eurotop 300 index was up 1.5 percent at 792 points after being flat before the report. In Frankfurt the DAX was up two percent at 2,638, while the French CAC 40 rose 2.3 percent to 2,860. Technology stocks were among the leading decliners after the world's largest database software company Oracle Corp. (ORCL) posted better-than-expected earnings but investors were disappointed by weak licensing revenue and a murky outlook. (Full story) SAP (FSAP), Europe's biggest software company, slid 4.4 percent to 76.11 euros in Frankfurt and the continent's biggest chipmaker STMicroelectronics (PSTM) dipped 2.6 percent to 18.50 euros. Adding to the gloom, the Federal Reserve held U.S. interest rates unchanged, as was widely expected, on Tuesday but said it could not gauge the economy's prospects due to uncertainties caused by a pending war in Iraq. The Fed also said it was on "heightened surveillance," which the market interpreted as being willing to cut interest rates at short notice. (Full story) The AEX index in Amsterdam slipped 0.6 percent and Milan's MIB30 index declined 0.4 percent, while the SMI in Zurich dipped 0.3 percent. In the U.S. on Tuesday, blue-chip stocks rose for the fifth straight session, their longest winning streak in nearly two years, as investors placed more bets that a war with Iraq would go well for the United States. The Dow Jones industrial average rose 0.6 percent, or 52.31 points, to 8194.23, the Nasdaq composite also added 0.6 percent, or 8.28 points, to 1400.55, and the S&P 500 index inched up 0.4 percent, or 3.66 points, to 866.45. Wall Street was expected to open slightly lower later on Wednesday. S&P 500 index futures fell 2.2 points to 864.0 on the Globex trading system, while fair value, a measure that takes account of interest costs and dividend payments, was calculated at 864.89. European shares have rallied 15 percent since hitting a six-year low last Wednesday with dealers saying a short war in Iraq has now been factored into the market.
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