'Financial Times': Uncertainty Drags on European Markets
DEBORAH MARCHINI, CNN ANCHOR: The European markets are mixed this morning. We are seeing Frankfurt move quite decidedly lower. Adrienne Roberts, out of the "Financial Times," joins us now live from London. Adrienne, what's dragging on stock prices this morning?</s>ADRIENNE ROBERTS, "FINANCIAL TIMES": Well, Deborah, once again I suppose it's the uncertainty. We've got a European Central Bank interest rate meeting coming up this afternoon and also I think like any good parent, Alan Greenspan yesterday gave the market what he thought was good for it, rather what it wanted. And so I think that's also dragging down a little bit. A strange mixture of stocks on top at the moment, mostly old economy names. We're seeing health care, transport, oils doing all right, and all the normally loved ones, the telecoms stocks, the tech stocks, and the electronic stocks are trading either nowhere really or slightly lower.</s>MARCHINI: Frankfurt, in particular, losing a lot of ground, down 1 1/4 percent. I gather there were some results from Bayer that were not too positive.</s>ROBERTS: Yes, well, it's been a mixed bag. They are basically -- I think the key there was higher raw materials costs. Some aspects of the results were very good indeed, operating profit is up there and Bayer is expecting double-digit growth in sales for the whole year. The health care side, and particularly pharmaceuticals, did very, very well. I think in the last quarter, the health care side was up about 40 percent operating income. The problem came in with the chemicals side, the raw material costs higher, and I think the operating income there was up only about 4 percent, but the company believes it can do better, it believes import costs are going to drop in the future. Actually, analysts weren't too unhappy about those results. So the share is now trading about 2 1/2 percent higher.</s>MARCHINI: Higher? OK, because it was down earlier this morning when we checked. Another company, DaimlerChrysler, it seems that investors are re- evaluating that one after some more negative news yesterday. They're waiting for some statements from the company?</s>ROBERTS: Well, we've seen a fair amount of detail there. We know there's going to be a major shakeup. Obviously, as we saw from the results a few weeks back, the Chrysler operation in the U.S. is the weak link in the profits there, Daimler's been doing better. So what they've basically announced, we've got a replacement for the CEO in Wolfgang Bernhard (ph), who is with Daimler. We've got a replacement president, Diter Zetsche, who is replacing Jim Holden. They're talking about a wide-ranging strategic review, they're talking about looking at manufacturing, they're looking at purchasing. And one aspect I suppose that is potentially disturbing, they're talking about increased savings. I don't know what the manpower implications are there, whether there are going to be job cuts, we don't know about that yet, but whatever the case, there are going to be major changes; shareholders happy about that, the stock trading about 3 1/2 percent higher.</s>MARCHINI: Currency markets stable ahead of that European Central Bank meeting you mentioned. We do have euro, though, under 86 cents. Really no prospect that the ECB will hike interest rates?</s>ROBERTS: Well, most economists don't think so. There's this issue, you know: Is the European Central Bank going to use interest rates as a tool to support the euro? Most people think that they won't and most people think that that would be a bad idea. They feel that once you use one instrument for one goal and the ECB should be using interest rates to control inflation, people don't think there's enough inflationary pressure at the moment to justified an increase. Having said which, there hasn't been an increased in more than a month and people are saying that, you know, economists do believe that there might be a rate increase later in the year. So ECB keeping the market guessing, but the bet at the moment is that they're not going to move.</s>MARCHINI: All right, thank you, Adrienne Roberts, reporting live from the "Financial Times" in London.