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European stocks drop after technical rally

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(Globalpost/GlobalPost)

Europe's main stock markets fell Wednesday as dealers booked profits a day after a technical spike for equities, while Vodafone shares slid after US telecoms operator Verizon denied it was preparing a bid to buy out the British mobile phone giant.

European equities had rallied on Tuesday in thin trading, with Frankfurt and Paris closing up almost 2.0 percent each, as dealers began returning to their desks after the Easter holiday weekend to digest developments over the Cyprus debt crisis.

In late morning trade Wednesday, London's FTSE 100 index of leading companies was down 0.35 percent at 6,467.90 points.

Frankfurt's DAX 30 dipped 0.09 percent to 7,936.37 points and in Paris the CAC 40 shed 0.14 percent to 3,800.16.

"Yesterday's gains came in spite of a slew of poor economic data," said Chris Beauchamp, market analyst at IG trading group. "In a neat reversal, today we are seeing a modest pullback."

Vodafone's share price dropped 2.16 percent to 187.85 pence after Verizon distanced itself from press speculation regarding a potential merger with the British group.

"As Verizon has said many times, it would be a willing purchaser of the 45 percent stake that Vodafone holds in Verizon Wireless," the US company said in a statement.

"It does not, however, currently have any intention to merge with or make an offer for Vodafone, whether alone or in conjunction with others," Verizon said in a statement filed Tuesday with the Securities and Exchange Commission.

Various media reports had said that Verizon was mulling a joint attack with AT&T that would see the pair divide up Vodafone assets.

Market focus also remained firmly on Cyprus, with the International Monetary Fund on Wednesday agreeing to provide approximately one billion euros to the 10-billion-euro rescue plan for the cash-strapped eurozone nation.

This would be through a three-year 891-million-euro Special Drawing Rights loan, announced IMF managing director Christine Lagarde.

The European Central Bank (ECB) will meanwhile hold off from cutting rates or announcing any other policy moves at its meeting Thursday so as to keep up pressure on governments to solve the eurozone's crisis, analysts said.

The ECB has never hesitated to act as firefighter in the long-running crisis, which seemed to have abated until political gridlock in Italy and the crisis in Cyprus sent shockwaves through financial markets once again.

Also Thursday, the Bank of England is expected to vote to maintain both its record-low interest rate and level of cash stimulus as investors wait to see whether Britain's economy has re-entered a period of recession.

In foreign exchange trade Wednesday, the euro rose to $1.2830 from $1.2813 late in New York on Tuesday. Gold prices dropped to $1,569.94 an ounce from $1,583.50.

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