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BAAN SHARES HIT BY PROFIT WARNING

Dutch software writer Baan Company slumped after the business software company said it expected its fourth quarter loss in 1999 to widen, partly as a result of a restructuring, and announced the departure of chief executive officer Mary Coleman.

Europe's No. 2 maker of business-management software said it was shifting its focus to services on the Internet.

Shares of Germany's SAP, its most important competitor which is already concentrated on Internet applications, fell, and technology services company Cap Gemini slid around six percent after Baan's announcement.

The share price of Dutch financial services group ING Group .

AS slipped over three percent then recovered to flat after it repeated it was still interested in a takeover of French bank CCF, but would not increase the price it offered last month in an abortive bid.

Morgan Stanley Dean Witter said on Tuesday it had cut its rating on French bank Credit Lyonnais to "underperform" from "neutral", setting a price target of 35 euros. Shares responded with a 5.23 percent fall.

In the insurance sector, shares in European's largest insurer Allianz AG fell 8.3 percent despite Morgan Stanley Dean Witter raising its rating on the German insurer to "neutral" from "underperform".

Shares in aero-engine maker Rolls-Royce Plc rose 4.44 percent after weekend press speculation about a possible merger with U.S. rival Pratt & Whitney.Some investors also saw the stock as undervalued, analysts said.

Pratt & Whitney parent United Technologies dismissed the Rolls sale speculation as "preposterous".

Basic industrial and automotive shares generally suffered less than the other sectors reflecting some investment rotation away from the high technology growth stocks, analysts said.

"I think that is going to be a feature that we see more and more of over the coming weeks," said Enskilda's Evans.Precious metal refiner Johnson Matthey was one of the rare gainers advancing 1.45 percent.

Morgan Stanley Dean Witter raised its ratings on five European mining and metals companies while lifting its price targets for a further six firms in the sector.-Reuters