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Europe mixed as autos skid
LONDON, England (CNN) -- European markets were mixed Wednesday morning after Wall Street eked out a small gain but DaimlerChrysler issued a profit warning. London's FTSE was little changed at 4126.60. The CAC 40 blue chip index in Paris closed up 0.80 percent at 3,063.85, while Frankfurt's Xetra Dax at 3,080.02, closed up 1.76 percent. The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 0.2 percent. But auto stocks fell sharply after DaimlerChrysler (FDCX) warned its U.S. business would make a 1 billion euros operating loss in the second quarter. (Full story) Its stock fell 5 percent to 25.42 euros, rival Volkswagen (FVOW) slid 1.6 percent to 31.00 euros and BMW (FBMW) dropped 1.7 percent to 28.80 euros. Renault (PRNO) and Peugeot (PUG) topped the loser board in Paris, skidding more than 1.5 percent each. Hopes that the European Central Bank will cut interest rates on Thursday and the Federal Reserve in the U.S. would trim the cost of borrowing in three weeks made a strong argument to snap up stocks. "Even the closet bulls on the stock market will come out to buy now after Greenspan signaled he will throw in a few more rate cuts to protect asset prices against deflation. Also Duisenberg's comments signalled a 50 basis point (0.5 percentage point) rate cut by the ECB is likely," Anais Faraj global strategist at Nomura told Reuters. "The environment for equities is improving, bond yields remain low and business confidence seems to have bottomed. The only fly in the ointment is the strong euro which will cramp corporate earnings in the second half of the year." Federal Reserve Chairman Alan Greenspan said it may be wise to lower interest rates as "insurance" against deflation. (Full story) The session's biggest loser was Cable & Wireless (CW), which fell10 percent to 86.5 pence, after saying it would cut 1,500 jobs and withdraw from the United States as it struggles to turn around its business. (Full story) The AEX index in Amsterdam inched up 0.1 percent, while Milan's MIB30 and the SMI in Zurich were flat. In the U.S. on Wednesday, stocks managed to eke out gains, and the Nasdaq sailed to its highest point in more than a year, despite pressure from an investigation into revenue bookings at IBM and a possible indictment of Martha Stewart. (Full story) The Nasdaq composite rose 0.8 percent, the Dow Jones industrial average chalked up a 0.3 percent in gain, and the S&P 500 index gained 0.5 percent. Wall Street was expected to open higher later on Monday.
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