Securities Industry Europe

Investors worldwide ignored the shaky start to Europe's new single currency and poured their money into European markets Monday. It was a surprising conclusion to a tumultuous weekend meeting in which the leaders of Europe chose 11 countries to participate in the new money, called the euro, but also waffled over selecting the head of the new European Central Bank. Because France and Germany were backing rival candidates, the 15 nations of the European Union essentially split the difference.

The Nasdaq Stock Market said Tuesday it will spend $63 million to acquire control of Easdaq, a small European securities bourse that specializes in initial public offerings, as part of the U.S. market's plan to provide 24-hour global trading. Nasdaq, the second-largest U.S. stock market, earlier had sought a foothold in Europe by trying to form a joint venture with two of Europe's three largest markets, the London Stock Exchange and Deutsche Boerse.

German stocks surged Thursday as the government said it plans to drop a tax on asset sales by companies, paving the way for major companies to sell stakes in industries worth about $100 billion and change the corporate landscape in Europe's biggest economy. Allianz and other major stocks soared and the DAX index posted its biggest gain since March 12--when Oskar Lafontaine quit as finance minister--on optimism that companies will make better use of cash tied up in long-term holdings.

Bank of America Corp., the largest U.S. bank, said it's considering acquisitions and hiring investment bankers from rival firms to bolster its securities business in Europe. The Charlotte, N.C.-based bank has no plans to buy a "big investment bank" and would rather recruit bankers from other firms, said Kenneth Lewis, Bank of America's president and chief operating officer. The bank would consider buying a smaller firm to fill a particular niche, he said.

Bank of America Corp., the largest U.S. bank, said it's considering acquisitions and hiring investment bankers from rival firms to bolster its securities business in Europe. The Charlotte, N.C.-based bank has no plans to buy a "big investment bank" and would rather recruit bankers from other firms, said Kenneth Lewis, Bank of America's president and chief operating officer. The bank would consider buying a smaller firm to fill a particular niche, he said.

As hot as the U.S. stock market is, it's a piker compared with European stocks. Most major European markets soared anew on Wednesday, drawing strength from expectations for continued moderate U.S. interest rates, and from the stronger dollar. The German market's key index zoomed 175.67 points, or 4.2%, to a record 4,406.09, in the biggest rally this year. In France, the key index jumped 2.8%, while Dutch shares leaped 2.9% and Italian shares were up 1.8%.

European stocks rose, led by Germany, as a rebound in Japanese shares eased fears of a meltdown in Asian markets and a strengthening U.S. dollar helped boost shares of exporters. Japanese stocks gained for a second day, led by banks and brokerages, amid optimism the government will apply strong measures to bail out the country's faltering financial industry. Tokyo's benchmark Nikkei-225 index rose 3.5% to 16,603.20 points.

Many foreign stock markets have shown surprisingly small reactions to Wall Street's recent turbulence--a good reminder of the benefits of international investment diversification. While the Dow Jones industrial average has fallen 5.2% since Nov. 14, including the 120-point plunge on Nov. 15, the Hong Kong stock market has actually risen 0.8% in that period, as measured by the blue chip Hang Seng index. How a few other key markets fared: * German stocks have barely budged.

Pressure is growing in Western Europe for companies and stockbrokers to tell the public more about the stocks they try to sell. Governments have enacted or are debating new rules, and stockbrokers and market analysts told Reuters that they expect a move toward harmonizing widely varying standards now prevailing in Europe. In Britain, a tough new market-regulating law requiring disclosure of information materially affecting a company's prospects for investors took effect in April.

Most European stock markets have rallied briskly over the past week, as the Continent's latest currency crisis opened the door to much-needed interest rate cuts. Despite the markets' gains, many international stock mutual fund managers say they're still eager to boost their ownership of European shares, anticipating an economic recovery.

Officials said Wednesday that Nasdaq's role in the soon-to-be-merged Anglo-German bourse propels its European ambitions and moves it closer toward its ultimate goal of erecting a global market. Founded in 1971, Nasdaq has grown from a place to trade stocks over the counter to an electronic market that now is the chief rival of the 208-year-old New York Stock Exchange.

The French, Dutch and Belgian stock exchanges, facing stiffening competition from global online trading networks, could announce as early as today that they intend to merge. The unified exchange would be Europe's second-biggest behind London, trading stocks with a combined value of $2.17 trillion. Paris would make up two-thirds of that capitalization.

U.S. and European stocks could drop 15% to 20% in the next several months, and the decline is likely to drag Asian markets lower as well, strategists at Morgan Stanley Dean Witter & Co. warned Tuesday. The firm raised the cash weighting in its "Macro Navigator" model portfolios and reduced its exposure to U.S., European and Asian stocks, according to a report by investment strategist Robert J. Pelosky.

German stocks surged Thursday as the government said it plans to drop a tax on asset sales by companies, paving the way for major companies to sell stakes in industries worth about $100 billion and change the corporate landscape in Europe's biggest economy. Allianz and other major stocks soared and the DAX index posted its biggest gain since March 12--when Oskar Lafontaine quit as finance minister--on optimism that companies will make better use of cash tied up in long-term holdings.

They are calling it the financial community's Desert Storm. Camp beds and food rations have been brought into bank command centers. Special subway trains and shuttle buses are running. Emergency crews are on standby. To be sure, for many of these tens of thousands of euro soldiers, it's hotel rooms and gourmet catering.

Investors looking for a haven in European stocks may have been startled to see the markets there dip even more sharply recently than those in the United States. After drops of more than 1% on Monday in markets throughout Europe--even worse in Germany and France--the major European stock indexes are down slightly more from their mid-July peaks than are the Standard & Poor's 500-stock index and the Dow Jones industrial average.

France's slim OK of European unity is no big confidence builder for the Europeans, and neither will it do wonders for U.S. investors, many of whom probably are beginning to view foreign investments with great suspicion. Indeed, last week's mass confusion in European currency markets just made a bad situation worse for Americans who've taken a plunge into foreign stocks and bonds in recent years. First the long Japanese bear market; now a financial disaster in staid old Europe.

They are calling it the financial community's Desert Storm. Camp beds and food rations have been brought into bank command centers. Special subway trains and shuttle buses are running. Emergency crews are on standby. To be sure, for many of these tens of thousands of euro soldiers, it's hotel rooms and gourmet catering.

The Paris Bourse is planning an alliance with European exchanges left out of the partnership announced between the London Stock Exchange and Frankfurt's Deutsche Boerse, its chairman said in interviews. Jean-Francois Theodore, chairman of SBF-Paris Bourse, which owns the French stock and derivatives markets, said that by September Paris intends to present plans to form a rival federal exchange including Spain, Italy, the Netherlands and Belgium.

The London Stock Exchange joined its biggest rival, Frankfurt's Deutsche Boerse, in a surprise alliance Tuesday, laying what both sides hope is the foundation for a single European stock market. Negotiated in secrecy over the last two months, the strategic pact unites the Continent's two largest exchanges in a project to make it cheaper and easier to trade major European stocks.