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Monday, January 18, 1999 Published at 09:54 GMT

Business: The Economy

Mergers boost markets

Markets soared as merger fever took hold

A fresh round of mega-mergers has boosted share markets in Europe and the Far East. London's stock exchange was the top performer, because of the involvement of many UK companies in merger deals.

John Moylan reports on the wave of mergers in recent months
London's key index, the FTSE 100, finished the day a massive 3% or 182.9 points higher at 6,123.9.

Dealers said the market had been boosted by receding worries about economic collapse in Latin America and the good performance of global equity markets.

Mergers were the other big market movers. The big deal between mobile phone operators Vodafone and Airtouch was sealed and pushed up Vodafone shares which were among the top performers in the City.

Leading defence groups BAe and GEC confirmed that they were in merger talks involving GEC's Marconi subsidiary, creating new interest in the defence industry.

In Germany, the DAX index rose sharply at the opening and stayed at solid levels. Frankfurt's top index ended the day up 90 points or 2.1% at 5,050. Banking shares did well after Friday's $30bn merger of Banco Santander and Banco Central Hispano.

Ralf Zienert, a trader at Credit Suisse in Frankfurt, said: "German banks don't have a big exposure to Brazil, but they were hit hard last week and are now rebounding."

Telecom shares were big movers too, boosted by rumours about possible deals between German phone companies.

[ image: Shares prices are up as markets shrug off the real flotation]
Shares prices are up as markets shrug off the real flotation
Paris was spurred by rumours about car maker Renault snapping up Japan's Nissan, boosting the Cac 40 index by more than 96 points to 4,151.

Stock markets in the Far East also started the week higher, with Tokyo shares closing up 0.5%. Hong Kong shares advanced more than 2%, following Wall Street's gains at the close of last week.

BBC Business Correspondent Greg Wood explains why Brazil matters
Markets appear unperturbed by the announcement that Brazil will continue to let its currency, the real, float.

Wall Street is closed on Monday for a public holiday to celebrate Martin Luther King's birthday.

Currency relief

Brazil's decision to stop defending its currency with US dollar reserves and allow the real to float prompted a sharp rebound in the world's share markets on Friday as Wall Street jumped 2.4%.

[ image: Analysts and traders could soon turn against Brazil again]
Analysts and traders could soon turn against Brazil again
Investors were relieved that the Brazilian Government had stopped spending millions of dollars on what many thought to be a futile attempt to defend its currency.

Friday rally

Wall Street surprised many on Friday, soaring during the whole trading session. New York Stock Exchange's main index, the Dow Jones, closed up 219 points or 2.41% at 9,340 reclaiming most of the losses suffered on Thursday.

Technology shares continued their seemingly unstoppable rise. The Nasdaq index, home to many computer and Internet companies, was up more than 71 points, or 3.14%, at 2,348. Top performer was a company that made its stock market appearance: gained more than 475% on its first day of trading.

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