Twin takeover bids in the Italian banking sector made for hectic activity in Milan where trade was delayed on several stocks due to excessive gains. The Mibtel index closed 202 lower at 25,036, off a high of 25,565 and up from a low of 24,891.
Shares in takeover target banks performed exceptionally and the merger frenzy also helped push other banks higher. Shares in Banca di Roma, target of a friendly $9.7 billion share swap offer from San Paolo-IMI, closed 7.3 per cent higher at €1.51 after soaring almost 13 per cent at the open.
Banca Commerziale Italiana, courted with a $16.4 billion shareswap offer from UniCredito, closed 4.9 per cent higher at €7.55. BCI savings shares were 28 per cent higher at €7.46 by the close after leaping 43 per cent.
Shares in the two predators fell, with San Paolo down 5.3 per cent at €14.95 and UniCredito 5.3 per cent lower at 5.01. Among other banks, Intesa finished 1 per cent lower at €5.51 after an early €5.80, but BNL closed 5.2 per cent higher at €3.19.
Mediobanca jumped 6.2 per cent to €13.38 after earlier suspension for excessive gains. Speculation suggested that the merchant bank could itself be a takeover target, thanks in part to its significant holding in insurer Generali, which rose 4.3 per cent to €38.26.
Frankfurt was lower, led down by weakness in SAP and Lufthansa, while Commerzbank, the day's most heavily traded stock, bucked the weak trend. The Xetra Dax index closed with a loss of 74.07 at 5,034.68.
News that Commerzbank, which reports 1998 results tomorrow, wanted to buy back up to 10 per cent of its shares sent the stock 10 cents higher to €28.20. News that it might seek a stake in Credit Lyonnais when the French bank is privatised later this year spurred merger speculation, helping the stock.
In the opposite direction, Dresdner Bank lost 90 cents to 37.60 in an extension of the profit-taking which called a halt to the shares' strength after BNP's bid for Societe Generale and Paribas. Dresdner and BNP have small cross-shareholdings.
SAP fell €11.40 to €276.10 as investors displayed nerves over the business software maker's ability to sustain high growth levels. The group reports 1998 group results on Thursday.
Paris ended marginally down as inflation worries weighed on the market. The CAC-40 edged 22.59 lower to 4,197.06 as fears of higher commodity price inflation were fanned by the continuing recovery in oil prices. Volume remained subdued throughout the session.
Oil stocks Elf Aquitaine and Total ended lower. Elf closed down €1.80 at €125.2 while Total declined €1.90 to €108.10.
The negative sentiment also affected cyclical stocks, with Legrand slipping 3 per cent or €5.90 to €188.10 and Schneider ending 70 cents lower at €51.30.
