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Paris : glimmer of light

Solid results from drugs group Sanofi Synthe Labo provided a glimmer of light among flagging French shares on Wednesday morning as technology and relecom stocks swing lower on bleak sector earnings overnight.

A clutch of disappointing figures from US telecom Lucent Technologies and AT&T Corp dragged Paris CAC bluechips Alcatael and ST Microelectronic down, while France Telecom was also hit. Also weighing on the downside, retailer Pinault Printemps Redoute fell 1.72 % after the group's holding company, Artemis, said tit would issue 1.00 to 1.20 billion euros of bonds exchangeable into RPR shares.

Poor results hit building materials group Lafarge, which dropped
2.43 % after its US unit posted wider than expected first quarter loss. By early trade, CAC 40 was trading 0.45 % lower at 5400.

"Markets globally are searching for guidance but while earnings are still weakening in the US, it will be almost impossible to sustain the recent correction," Mobashar Ahmed, Chief Analyst at futuresdata.net, said. "We are going down again and the tendency will be to get out, rather than ride out another big dip," Mr Ahmed continued.

He said daily indicators are starting to reverse to the downside, suggesting that then technical rebound is reaching an end. He also said a fall below 5240 points would leave the bluechip index with next support at 4800 and 4400.

Drugs group Sanofi Sunthe Labo was Wednesday's star performer, adding 2.04 % after it posted a better than expected 13 % increase in first quarter sales to 1.522 billion euros and said it saw around 30 % growth in 2001 net profit before exceptionals.

The Sanofi figures lifted French peer Aventis 1.34 % higher. On the wider markets, France Telecom's internet arm, Wanadoo, dropped over 1 % after posting inline first quarter sales, which showed higher than expected revenues from its internet portal business.

Paris closes higher

Paris shares closed higher on Friday when banking stocks led by Societe Generale spearheaded a rebound from a dramatic morning sell off, triggered by earnings warnings from computer firms Segma and Sema.

The blue chip CAC 40 index ended the day up 1.53 % or 92.10 points higher at 6145.65 springing back from early losses that took it to lows around the 5990 mark. Peering into next week, futuresdata.net Chief Analyst, Mobashar Ahmed, said the blue chip CAC 40 was unlikely to stage a solid comeback until wrangling over the US election was resolved and global markets found a firm footing.

"We have been down to the 5900 zone and bounced back several times in the last week, so we could still rebound," Mr Ahmed said. Despite recovering from near month lows around 5940 reached midweek, the CAC 40 is still far from its November high above 6430 and Mr Ahmed warned consolidation back towards 5750 looks increasingly likely. "We have seen a little rebound in the last few days, but the market is very fragile and could easily turn down again," he said.

Revealing the ragged state of investor nerves, Anglo French software group Sema plunged 46 % to 5.85 euros after saying its second half results could be below expectations, dragging a host of tech shares in its wake.

Providing a double dose of bad news for tech and telecom stock holders, telecom equipment maker Sagem dived 33.27 % after the group lowered its forecasts for 2000 profits and sales, hitting a slowdown in the mobile phone market.

While computer firms across Europe fell in sympathy with their French peers, bargain hunters transformed losses in many casualties into solid gains. Information technology group Cap Gemini trimmed to 2.50 % losses of more than 7 %, while telecom equipment maker Alcatel reversed a drop of more than 2 % to finish the day up 4.38 %.

France's big banks made the real running in the rebound, bouncing back from losses earlier in the week. Societe Generale closed the day as the top gainer in the Euro Stoxx banking index, finishing up 4.81 % at 64.30. BNP Paribas gained 2.36 % and Credit Lyonnais rose 1.79 %.

Mobashar Ahmed said mounting evidence of a slowdown in Euro Zone and United States growth was boosting banks, seen as well placed to deliver steady earnings, despite a down turn in the wider economy.