Paris shares higher in light midday trading

Share prices were higher in midday trading, lifted by a tentative round of bargain hunting after heavy selling seen last Thursday and Friday, although Axa underperformed as investors fear a recent string of capital increases by European insurers could signal similar moves for the rest of the sector, dealers said.

At 12.16 pm, the CAC-40 index was up 14.38 points at 3,170.55, on thin volume of €642.7m.

On the Matif, September CAC-40 futures were trading 15 points firmer at 3,176, while the euro slipped to 0.9697/$9700 from 0.9762/$66 late on Friday.

Dealers said little conviction was supporting today's recovery, as uncertainty about the outcome of likely military action against Iraq continues to darken the investment horizon, particularly as the costs of any strikes could push the US economy back into recession.

"An oil price increase could damage consumer spending," said one trader. "It's so hard to know what might happen, and the economy is in such a fine balance at the moment."

Expectations of capital increases from France Telecom and Axa also capped this morning's gains, as investors expect any share offering would require heavy discounts, given the weak equity market environment, dealers said.

Axa dropped 0.60 euro or 4.8% to 12 as a string of capital increases from rival European insurers in recent weeks raised fears that Axa might be forced to do the same. AGF also fell back, down 0.53 to 35.20.

France Telecom was off 0.02 at 10.33, handing back earlier gains as a management void, doubts about strategy and expectations of a heavy refinancing effort all undermine confidence, dealers said.

Orange also handed back opening gains, down 0.05 at 5.47, with investors uncertain if France Telecom will sell another part of its 85% stake in the mobile operator, even though France Telecom's outgoing chairman Michel Bon said this option would be a mistake in a press interview yesterday.

Among index heavyweights, TotalFinaElf was up 1.30 at 141.80, Aventis gained 0.50 to 56.50 and STMicroelectronics advanced 0.02 to 17.75, while L'Oreal fell 0.95 to 74.80 after a recent string of gains, seen in the wake of strong first half earnings, dealers said.