European stock indexes turned negative yesterday afternoon as investors mulled whether a recent advance has gone as far as it can for the time being, with France Telecom heading decliners amid worries about sales trends at its Orange mobile unit.
Traders said the failure of London's FTSE-100 to capture the key level of 4,000 points, and the inability of Paris's CAC-40 and Frankfurt's DAX indexes to break above 3,000 points, signalled the rally that has pumped over 20 per cent into European bourses over the past seven weeks may be running out of breath.
Earlier on, European bourses rallied to three-month highs after a much-better-than-expected US consumer confidence reading and a fresh batch of forecast-beating quarterly earnings had fuelled hopes that the corporate and economic pictures were improving.
"There are no rumours doing the rounds in the markets. I think we went up quite a bit in the past few days and markets rose again on the US consumer confidence data. It's nothing more than a bit of profit taking after a nice ride up," said a senior trader in a US bank.
"Obviously a few investors bought after the good US data but as we didn't manage to hold the 3,000 point level they then took profits," said another trader in Frankfurt.
By 1511 GMT, the FTSE Eurotop 300 index of pan-European blue chips shed 0.2 per cent to 825, while the euro zone DJ Euro Stoxx 50 index was down 0.7 per cent.
Among national benchmarks, the French CAC 40 index rose 0.3 per cent while the British FTSE 100 was 0.3 per cent lower, the Swiss Market Index was 0.6 per cent down, and the German Dax index nudged 0.5 per cent lower.
On Wall Street, the blue chip Dow Jones industrial average and the tech-laced Nasdaq Composite traded about 0.1 per cent.
France Telecom featured among the biggest decliners of the session, off five per cent despite posting a 7.3 per cent rise in first-quarter sales as some analysts expressed concern about subscriber figures in Orange's core French and British markets.
On the upside, shares in Ericsson were 17 per cent higher, having trimmed an earlier 25-per cent jump as the markets turned negative, after the Swedish technology powerhouse reported first-quarter results that contained no major negative surprises and pleased investors with new plans to cut thousands more jobs to reduce costs.
Ericsson rival Alcatel also gained three per cent after coming up with a first-quarter net loss that narrowed to 461 million euros, although enthusiasm for the stock was tempered after the French group said the outlook for its market was worse than earlier forecasts.
Elsewhere, media giant Vivendi Universal gained 2.5 per cent after Chairman Jean-Rene Fourtou said it would take another year to finish restructuring the massive expansion debts inherited from his ousted predecessor Jean-Marie Messier.