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To: long-gone who wrote (19956)	9/28/1998 7:00:00 AM
From: Giraffe	Read Replies (1) \| Respond to of 116762

Worries of further hedge fund problems dampened sentiment following last week's rescue of LTCM, with the Financial Times reporting serious losses at Convergence Asset Management. There was more gloomy news out of Japan, too, with the failure of Japan Leasing Corp., a nonbank affiliate of ailing Long-Term Credit Bank of Japan . Japan Leasing on Sunday filed for court protection from creditors, saying on Monday its debts totalled 2.18 trillion yen ($16.28 billion). Monday September 28, 6:39 am Eastern Time FOCUS-Euro stocks shed gains on global worries (Updating with late morning trade) By Richard Baum LONDON, Sept 28 (Reuters) - European stocks threw away strong opening gains to trade little changed to lower at midday on Monday, with an expected U.S. interest rate cut unlikely to change uncertainties over the global economy, traders said. Those uncertainties appeared to increase over the weekend with a change of government in Germany, the biggest bankruptcy yet in Japan and a report that a second U.S. hedge fund faced big losses in the wake of the near-collapse of Long Term Capital Management (LTCM). ''It (a U.S. rate cut) would undoubtedly provide support,'' said BT Alex Brown's UK equity strategist David McBain. ''But whether that is a temporary respite or something more sustained may well depend on the continued news flow that we get in terms of the economic picture.'' ------------------------------------------------------------ MARKET PRICES AT 1024 GMT MARK 1.6826/68 YEN 136.15/20 STERLING 1.6977/83 GOLD $293.25/293.75 -4.60 (pvs PM fix) BRENT $14.50 +0.07 FTSE 5042.4 -18.60 CAC 3,271.01 -39.58 X-DAX 4595.34 +10.93 ------------------------------------------------------------ Expectations that Gerhard Schroeder's Social Democrats would form a tax-hiking coalition with the ecologist Greens in Germany unsettled German bond futures and boosted the dollar against the mark. The stronger dollar helped exporters to lead the German stock market higher at the open, but Frankfurt had given up a three percent gain at the end of morning trade as an initial boost from hopes for a U.S. rate cut and gains on Asian bourses faded. The Dax index was up 0.36 percent and the electronically traded Xetra Dax gained 0.05 percent. The London and Paris markets also reversed early rallies, with the FTSE 100 down 0.46 percent and the CAC 40 falling 1.25 percent. Other European markets were mixed, sending the Dow Jones Stoxx index of top European shares down 0.31 percent. Despite expectations that the U.S. Federal Open Market Committee (FOMC) will cut rates by at least a quarter point after a meeting on Tuesday, stocks were unable to hold early gains. Concern about the impact of emerging market turmoil on the European and U.S. economies is continuing to keep investors wary of stocks, traders said. ''Everyone is waiting on the U.S. rate decision but there are a few distrusting people around who would like to see the markets on a firmer footing before they get involved,'' said a trader at one leading investment institution in London. Worries of further hedge fund problems dampened sentiment following last week's rescue of LTCM, with the Financial Times reporting serious losses at Convergence Asset Management. There was more gloomy news out of Japan, too, with the failure of Japan Leasing Corp., a nonbank affiliate of ailing Long-Term Credit Bank of Japan . Japan Leasing on Sunday filed for court protection from creditors, saying on Monday its debts totalled 2.18 trillion yen ($16.28 billion). Bonds again appeared to benefit from the unease over stocks, with most benchmark futures squeezing out gains. German Bund futures, however, were unsettled by the first defeat in 16 years for Helmut Kohl and his Christian Democrats. The Eurex December Bund future fell by as much as 35 basis points in early trade before recovering some ground to stand 15 basis points lower at 113.50. The benchmark 10-year government bond rose, climbing 0.17 to 106.45, yielding 3.945 percent. The dollar edged up from overnight lows against the mark as the election result prompted some nervousness in the market over what shape the new government will take and whether there will be a significant change in economic policy. ''There is some concern an alliance with the Greens will see a looser fiscal policy mix, but for the most part the market doesn't seem to see any great changes and the mark is pretty calm,'' said one U.S. bank dealer. The dollar was trading at 1.6830 marks, up from an overnight low of 1.6719 and up from late Friday's 1.6732. Against the yen, the dollar was up from its overnight lows but trading in a tight range near 136.11, little changed from late on Friday in Europe. News of the failure of Japan Leasing was balanced by optimism over Japanese ruling and opposition parties' agreement at the weekend on key banking plans. Passage of the bills through the Lower House is still seen a long way off.