BBC

Monday, 26 March, 2001, 08:21 GMT 09:21 UK

Shares get early lift

Monday started with good cheer, but will it last? Europe's stock markets had a brighter start to the trading week, following the upbeat lead from Asia.

After an hour of trading London's benchmark FTSE 100 index was nearly 1% higher at 5,452.

In Paris the Cac 40 was 1.2% higher at 5,011 and in Frankfurt the Dax was 1.5% higher at 5,630.

In Asia there had been even stronger gains on Monday, with Tokyo's Nikkei ending nearly 5% higher at 13,862, while Hong Kong's Hang Seng index ended 2% higher at 12853.

It was too early to say whether the gains signified a change in mood as worries continue about the prospects of economic slowdown in the US spreading to the rest of the world.

Cisco Systems chief executive John Chambers added to the gloom on Monday by suggesting that the US downturn would continue for "at east three more quarters" and possibly longer, in a UK newspaper interview.

Mr Chambers told the Financial Times that the outlook for the economy has deteriorated significantly since the internet systems manufacturer, which is seen as a key technology stock, warned in January that it expected the downturn to last for two quarters or more.

"The slowdown that we saw in January is continuing in February and March.

"We have seen the issues expand to Asia-Pacific and we see the early signs in Europe," Mr Chambers said.

Not a bull

But there may be some good news ahead.

Many traders have high hopes of a cut in interest rates when the European Central Bank (ECB) meets on Thursday.

In Japan investors scooped up chip makers and other tech shares after a strong performance in their US counterparts.

Foreign investors who had pulled out during the recent economic crisis are also expected to return following last week's interest cut by the Bank of Japan.

Share prices in New York rose on Friday, but they still ended the week below where it started, with analysts warning of further falls when trading resumes on Monday.

"Let's not mistake this for a beginning of a bull market move," said Avatar Associates' Charles White.

Traders describe markets that charge ahead as bull markets, while markets where pessimistic investors turn shy and try to hide are described as bear markets.

The bears have ruled for weeks in New York, and there are few signs beyond Friday's firmer close that this is about to change.

Throughout the first quarter of 2001, technology sector companies have been warning investors that their earnings will be lower than they had predicted earlier because the economic slowdown is beginning to bite.

The wave of earnings and profit warnings is expected to gain momentum in the next couple of weeks as the financial year comes to an end.

-- Anonymous, March 26, 2001