960424

Dutch shares surge to

fresh record high

AMSTERDAM: Dutch shares raced to a fresh record high finish on Wednesday, the AEX index of leading shares closing 1.63 points firmer at 553.88.

The index also peaked at a new intra-day record of 556.55. Dealers said the low interest rate environment in the Netherlands after last week's trimming continues to encourage follow-through retail and institutional buying from investors, particularly on the look out for high-yield stocks. Electronics giant Philips unveiled first quarter profits from normal operations this morning of 377 million guilders down from 544 million last year but in line with analysts' forecasts. Dealers said statements from the company that earnings may improve in the latter part of the year and that it expected its troubled consumer electronics division to end 1996 in profit helped soothe some investor fears.

"The results were bang in line with forecasts but there was nothing too worrying and the shorts covered," one dealer said. "People felt quite comfortable with the results and the expectations were fairly upbeat," said another. Philips' 75 percent-owned Anglo-Dutch film and entertainment group PolyGram ended the day sharply weaker after a newspaper said this morning it no longer intended to bid for MGM studios.

Philips denied the report and said that PolyGram was still interested in bidding for the studios. The shares recovered some ground but still ended the day 4.50 guilders down at 99.70. Financials were again strong, benefitting from further flows of investor funds searching for higher yields. Banking groups ING and ABN AMRO sprinted higher, ending 4.20 and 1.10 guilders higher at 131.40 and 87.80 respectively.

"The rate cut last week was the spark but we're seeing fresh buying as more clients jump on the bandwagon," one dealer said. The AEX index has now surged by nearly 70 points since late 1995, leading some dealers to predict a correction is imminent. But the market did not register gains across the board. Flag carrier KLM slumped 3.40 guilders to 57.10 as sentiment turned bearish on the stock following results on Tuesday from its 50 percent-owned unit Martinair. -Reuter