=DJ European Markets Jolted As Bomb Blasts Rock Istanbul By Adam Najberg Of DOW JONES NEWSWIRES FRANKFURT (Dow Jones)--A succession of deadly bomb blasts in downtown Istanbul sent a shockwave across European markets Thursday midmorning. Key stock indexes slipped and euro-zone government bond prices spiked briefly after the news hit markets shortly before 0910 GMT. Trading on the Istanbul Stock Exchange and in Turkish bonds and the lira was halted indefinitely. Major currencies were slower to react. In the $1.2-trillion-a-day global foreign exchange market the dollar slid briefly against the euro. Though information remains patchy, reports trickling in so far indicate four bomb blasts, including one near the HSBC Bank in a rich neighborhood, which killed at least two people, television reports claimed. Another, across from the British consulate, reportedly claimed 10 dead. Coming on the heels of two bombings outside Istanbul synagogues last weekend, markets were already a bit on edge on fears of a wave of terrorism and instability in Turkey. The synagogue blasts killed at least 23 people. Thursday&aposs blasts have put financial markets back into "safe-haven" mode, dealers in London said, with funds flowing out of equities into the relative safety of government bonds. European equity markets hit reverse early Thursday. At 1005 GMT, the DJ EuroStoxx index was 1.2% lower at 2543.15. Trading on the Istanbul stock exchange was halted, with the benchmark IMKB-100 index down 1162.67 points, or 7.4%, at 14617.53. "It (the explosions) obviously creates some jitters amongst investors," said one London-based strategist. News that one of the bombings was outside an HSBC bank branch sent HSBC Holdings PLC (HSBA.LN) shares down 0.7% to 865 pence in London. In Frankfurt, the blue-chip DAX fell 1.2%, dragged down by selloffs in shares of airline Lufthansa (LHA.XE), down 4.7%, and travel company TUI (TUI.XE), down 5.2%. Turkey is a favored destination of German tourists, and bombings will deter travel to the country. In Paris, the CAC-40 slid 1.7%. Despite the initial drops, the underlying economic and interest rate environment across Europe will continue to dictate and drive equities higher, heading into the end of 2003, said Rupert Thompson, European Equity Strategist at E*Trade Securities. Traders said while the explosion has damaged investor sentiment it also provided an opportunity for some investors to indulge in some profit-taking. "An event like this is a perfect excuse for many to lighten their holdings in equities and wait for the new year before jumping back in," said one London-based trader. That excuse is also prevailing in bond markets, after an initial flight to quality that pushed the December bund future sharply higher - to 113.20 at around 0920 GMT, before it settled back to 112.90 at 0930 GMT, after trading around 112.60 for most of the morning. It also sparked a move into Swiss bonds. "We&aposve had the initial reaction - now buyers are taking profits and everyone is back to watching the news for more information," he said. The December bund was trading at 112.86 around 1030 GMT. The move into Swiss bonds, viewed as a safer investment in times of market turmoil, is seen continuing for several weeks, however, traders said. The euro rose from $1.1925 to $1.1945, but sellers knocked it straight back to $1.1910. The Swiss franc, normally the first to attract safe-haven money, slowly moved to a session high of CHF1.2993 versus the dollar and CHF1.55 against the euro. "With all due respect, Istanbul is not New York or London," one dealer said, explaining the muted reaction. -By Adam Najberg, Dow Jones Newswires; +49 69 2972 5517; [email protected] (Oliver Biggadike in Frankfurt and Neil Keane and Tim Falconer in London contributed to this report.)
(END) Dow Jones Newswires November 20, 2003 06:00 ET (11:00 GMT)
