US stocks in London were mixed, but with a slightly negative bias in early trading, owing to weakness in European stock markets. ``But bid hopes have lifted some stocks,'' said a dealer. ``We're looking for the Dow to open unchanged to lower.'' Concerns that US interest rates are on their way up and that Europe's economy is slowing dangerously continue to sober investors, analysts said. US 30-year treasury yields have spiked to their highest level in seven months, at 5.63 per cent, undermining Wall Street and pushing yields in the European debt futures market upward.

``We're maybe having a down one percent day rather than a down two or three percent day,'' said Gary Dugan, European equity strategistat JP Morgan in London. Germany's Xetra DAX index was down as much as one per cent, reversing early gains. The UK, French, Italian and Spanish shares were also down. The FTSE Eurotop 100 index fell 0.5 per cent and blue-chips underperformed, with the Dow Jones Euro STOXX 50 index down 0.61 per cent. Automotive shares were the largest losers in early dealing as investors continued to sour on the sector in the wake of a dour 1999 profits outlook from Volkswagen AG.

Chemical and industrial sectors were also hit, reversing recent outperformance. ``A lot of people bought into these shares on the hope that we were seeing a European recovery and that U.S. growth would continue,'' said JP Morgan's Dugan. ``Now we are saying that US growth can't continue and Europe is having a bad time of it economically.'' German chemicals and drugs group Hoeschst AG fell more than one per cent after reporting a rise in net profits to 1.9 billion marks, in line with expectations. Insurance shares may face a stern test if interestrates continue to rise, said Achim Matzke of Commerzbank in Frankfurt. ``Interest-rate driven sectors such as insurance companies will be under pressure,'' he said.

Telecom Italia and Olivetti fell more than one per cent apiece on expectations of a long-running saga after Telecom rejected Olivetti's revised $58 billion hostile bid as "full of holes". The Dow Jones Industrial Average closed on Thursday off 33.33 points, or 0.35 per cent, at 9366.34, coming back from a 166 point loss earlier in the day. Tokyo stocks finished moderately lower, despite being helped by the dollar's rebound against the yen, as the market succumbed to a late sell-off in the futures market.

The benchmark Nikkei 225 average was down 102.91 points or 0.71 per cent at 14,367.54. Hong Kong stocks closed sharply higher as blue-chips rallied on reports that Walt Disney Co is moving closer to choosing the territory as a site for a new theme park. The blue chip Hang Seng Index surged 200.42 points or 2.08 per cent to close at 9,858.49.