Miners and exporters are hit
as Trichet hints at rate boost
By SARAH TURNER
THE WALL STREET JOURNAL EUROPE
June 6, 2008
LONDON -- Miners lost ground Thursday and exporters were hit after European Central Bank President Jean-Claude Trichet hinted that interest rates could rise next month.
The Dow Jones Stoxx 600 Index fell 0.1% to 316.61.
Following the ECB's decision Thursday to leave rates unchanged, Mr. Trichet said a "small" increase in interest rates is possible in July but "not certain."
Frankfurt's DAX 30 index fell 0.3% to 6941.83, and Paris's CAC 40 slipped 0.2% to 4907.06. In London, the FTSE 100 rose 0.4% to 5995.30
In Stockholm, ABB fell 2.3% while Alstom was down 2% in Paris. In London, BHP Billiton fell 1.2%, and Rio Tinto declined 0.7%.
"Interest-rate futures are indicating a 50% chance of a rate rise in Europe in October. This has slightly unnerved the market. If we see rate rises, then the market will come off, as everyone was expecting rate cuts," said Mark Priest, senior trader at TradIndex.
The telecommunications sector was buzzing with merger-and-acquisition news. Vodafone Group rose 3.8% in London after Verizon Wireless, Vodafone's joint venture with Verizon Communications, agreed to buy Alltel, creating the U.S.'s cellphone-market leader in terms of subscribers.
Shares of TeliaSonera jumped 6.5% in Stockholm after the telecom operator rejected a cash-and-share approach from France Télécom. France Télécom's shares fell 5.1% in Paris.
Several banks gained ground, with U.K. lender Royal Bank of Scotland Group up 3.8% and Swiss banking group UBS up 4.2% as sentiment improved a bit towards the battered sector. Citigroup analysts upgraded RBS to "buy" from "hold." HBOS rose 5.1% in London, while Barclays was up 3.1%.
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