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Eurostocks Advance as Dow Surges, Dollar Unmoved
By John Paul Rathbone  Reuters
LONDON — European stock markets forged ahead on Thursday after the Dow shrugged off any lingering market concerns about NATO airstrikes and opened sharply higher.

While NATO officials in Brussels warned the bombing raids would continue, the Dow vaulted ahead 100 points to over 9,750, buoyed by technology stocks to once again approach the magic 10,000 level.

Boosted by Wall Street's opening rally and a three percent rise in Tokyo, major stock indices in London, Frankfurt, Paris, and Milan built on gains of over one percent.

Even major eastern European markets made up losses suffered ahead of last night's airstrikes, although smaller bourses linked to Yugoslavia by geography or history continued to slip.

"It's the uncertainty that was hitting financial markets. Once the air strikes started, people did a bit of buying back," Geoffery Dennis, global emerging equity market strategist at Deutsche Morgan Grenfell.

In mainstream European markets, technology stocks led the way, boosted by Swedish telecoms group Ericsson's move to snap up U.S. company Qualcomm's terrestrial CDMA wireless business. Ericsson shares rose nearly eight percent.

Defense stocks such as British Aerospace also advanced as investors scented improved profits from the continent's first war in 50 years.

But European government bonds were little moved by safe haven flows as European Central Bank (ECB) rate cuts overtook Serbia as the focus of market concerns. Sweden cuts its key repo rate by 25 basis points on Thursday to 2.90 percent — below core Europe's 3.0 percent level.

Among currencies, the dollar was firmer against the yen at over 118.00 from 117.91 after Japanese officials warned of an overly strong yen, but was rangebound against the euro at around 1.088 despite Balkan turmoil.

Traders said stock markets remained firmly focused on Wall Street, although conflict in Kosovo might cap gains.

"The impression is that whatever happens over here, we will be tracking the U.S. for the time being," said one European trader.

In London, Europe's largest stock market, the FTSE 100 stood up over one percent after three straight days of losses.

The FTSE briefly ticked lower after a Confederation of British Industry (CBI) survey showed an improvement in manufacturing orders, raising fears an expected reduction in UK interest rates may be delayed.

Yet gilts and sterling hardly reacted as the sector was still seen struggling and the CBI called for a half point rate cut when the Bank of England next decides on rates in April.

France's CAC index also added to early gains to stand up more than 1.6 percent, boosted by software company Cap Gemini.

And Germany's Xtra DAX pushed ahead 1.2 percent, helped by Volkswagen that climbed 2.7 percent after forecasting a 20 percent rise in North American car sales next year. Yesterday's rebound in U.S. technology stocks, that pushed up the tech-heavy NASDAQ 1.8 percent, followed through into European trading and again into the New York session.

Shares in German software company SAP AG rose more than three percent in early trade but then fell back after it said 1999 first quarter pre-tax profit would "fall significantly" although 1999 sales would grow 20-25 percent.

In London, however, electronics retailer Dixons, which has launched a free internet service, rose more than four percent following a positive broker comment.

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