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Frankfurt
Germany's Dax index fell nearly 2% percent in Tuesday afternoon trade, weighed on by losses in Deutsche Telekom as concerns mounted about its global aspirations during merger talks between two US rivals.
By the close, the DAX was 120.54 points lower at 5,119.10 points.
Deutsche Telekom shares fell 2.82% to 38.24 euros amid concerns that talks between MCI WorldCom Inc and Sprint Corp could prevent the German group from breaking into the US market.
Telekom holds a 10% stake in Sprint and there has been much speculation that it could build on this interest to seek a takeover of the company.
Traders said Telekom shares were also under pressure as investors who have held the stock since its bourse debut in November 1996 might take profits and sell "loyalty" shares they are due to be given at the end of this week.
Broader uncertainty in the market about the direction of the US economy and concerns about a possible rise in US interest rates at next month's Fed meeting also dogged the market.
"The market is nervous and lacklustre. People are asking themselves whether they need liquidity," one trader said.
Amongst the few Dax gainers, Deutsche Bank shares rose 2.16 to 63 euros after its chief executive said the bank's operating earnings in this year's first nine months had already exceeded the figure for 1998.
Thyssen Krupp led Dax shares lower, falling 4.98% to 18.90 euros after a member of the ruling Social Democrats said the Transrapid high-speed train project, in which the firm is taking part, could be halted.
Thyssen Krupp said it was still positive about the future of the Transrapid magnetic high-speed rail project, which would link Berlin and Hamburg, and was unaware that its partners are considering leaving the project.
Shares in utility Viag, which on Monday unveiled plans for a merger with Veba, fell 2.72% to 18.95 euros as traders said the valuation was tilted in Veba's favour.
Veba shares were 1.36% lower at 54.50 euros, in line with the overall market.
Paris
Share prices closed lower in slim volumes under pressure from a weak Wall Street where valuation concerns and rate hike caution were weighing on sentiment, dealers said.
The Cac-40 index closed down 52.68 points at 4,543.92.
Volume for the day was 2.5 bln euro.
The market was weaker in low volumes from the outset with investors awaiting fresh domestic news.
Alcatel was the main focus, with the shares closing lower after the company announced a $1.5bn agreed share offer for Genesys Telecoms Lab of the US, which specialises in providing call centre solutions for businesses.
Alcatel shares closed down 3.40 eur, or 2.6%, at 126, having earlier fallen as low as 124.50.
Other technology stocks were also lower with France Telecom closing down 0.95, or 2.4%, at 79.05, STMicroelectronics off 1.80 at 74.70 and Equant down 1.20 at 74.50.
Pernod-Ricard shares fell back late in the session to close unchanged at 66.30.
Earlier, they hit a high of 68.20 in a continued response to a Mail on Sunday report that the company is planning a £4bn bid for Allied Domecq.
On Tuesday it formally denied reports that it has contacted the two buy-out firms Hicks, Muse, Tate and Furst Ltd and CVC Partners in recent weeks regarding an alliance with Allied Domecq.
Remy Cointreau was also pushed up by the report, closing up 0.45 at 18.66.
Aerospatiale also extended yesterday's gains, which came after Italian Defence Minister Carlo Scognamiglio said Friday that Aerospatiale-Matra, BAe and Finmeccanica are on the point of agreeing a defence electronics joint venture, dealers said.
The shares ended up 0.47, or 2.4%, at 20.34.
Accor shares fell 4 to 211.70, ahead of first half earnings scheduled for release tomorrow.
Analysts are expecting the company to report an 11% decline in net profit.
Among the bigger weighted Cac-40 stocks, Vivendi closed down 1.70 at 66.65, Thomson-CSF was down 0.37 at 31.01, Renault lost 1.05 to 49.05, Lagardere closed down 1.07 at 38.75 and Casino was off 1.20, or 3.7%, at 108.10.
In the financial sector, Axa fell 2.10 to 115.40, BNP was down 1.05 at 75.50 and Societe Generale lost 1.60 to 189.90.
TotalFina came back from recent lows to gain 1.60 to 119.80.
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