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German DAX falls 1pc, profit-taking hits telecoms

FRANKFURT: Germany's DAX share index fell one percent in Thursday midsession trade, dragged down by a five percent dive by Deutsche Telekom AG and a two percent fall in rival Mannesmann AG.

Telekom, the DAX's most heavily-weighted stock and last year's top gainer, suffered from profit taking after a 150-percent rise in 1999. Doubts about whether telecoms stocks can sustain last year's growth hit across the sector.

By 1050 GMT, the DAX was down 0.72 percent, or 47.14 points, at 6,454.93.

"I think the market will consolidate a bit further," said Udo Becker, trader at Merck Finck & Co in Munich. "The technical charts point to more selling signals and a test of 6,200, 6,000."

Deutsche Telekom was the leading DAX decliner and Frankfurt's most traded stock, contributing some 57 points of losses to the DAX. The stock fell 5.23 percent to 61.84 euros.

Mannesmann fell 2.42 percent to 211.87 euros.

Traders said the fall in Telekom was unrelated to news the group hopes for a deal later this month on the future ownership of its unravelling Global One corporate communications venture with Sprint Corp PHONON and arch-rival France Telecom.

Telekom said on Wednesday it could take over Global One if the other partners were willing to sell their stakes at the right price. Some media reports said Sprint could announce the sale of its 50 percent stake in the joint venture this week.

Deutsche Telekom and France Telecom each own around 25 percent of Global One.

Among gainers, financial stocks figured strongly after talk resurfaced on Wednesday of a merger between HypoVereinsbank AG and Dresdner Bank AG.

The two banks have declined to comment on media reports that a merger has been arranged but Dresdner shares rose 1.60 percent to 53.95 euros. HypoVerein was 0.15 percent higher at 68.30 euros.

Deutsche Bank AG rose 1.63 percent to 81.56 euros.

Merging utilities Viag AG and Veba AG also rose. A Hungarian subsidiary of Viag's Bayernwerk acquired an 80.2 percent stake in Hungarian electricity distributor Titasz, although financial details were not disclosed. The technology-rich Neuer Market index for small growth companies climbed 1.94 percent to 4,325.92 euros, reversing a 10 percent slump in the past two trading sessions.

Mobilcom AG, the index's leading telecoms issue, fell 1.75 percent to 78.50 euros.-Reuters