Paris and Frankfurt exchanges suffer Wall St aftermath

Blue chip stocks listed on the French and German exchanges suffered the after-effects of Friday's spectacular Wall St crash in early trading, although share prices rallied later in the day.

The Paris CAC-40 initially fell 255 points but recovered by 150 points to 5919.65 before lunch. However, the opening of the US Nasdaq sent the index plummeting again by 153 points.

One hour before close of trade, the exchange stood at 5970.85.

The Frankfurt DAX also experienced wild fluctuations on the day Deutsche Telecom floated its Internet service provider, T-Online.

T-Online had deliberately set a cautious IPO price, and was consequently insulated from some of the Nasdaq fallout. It opened at E28 (£16) per share - lower than intended - and grew steadily through the day. By mid afternoon the price had hit E34.69 (£20.88).

Falk Muller-Veerse, European research manager at Durlacher, said: "This is not a good day to float on but T-Online took all the precautions they did before they presented to the market. It was supposed to float at E40 to E50 but only managed to open somewhere under E30 - so almost 50 per cent down. But if they had floated a month earlier the share fall would also have affected them - that's life."

However, Richard Spinks, Internet entrepreneur and managing director of Vavo.com, was not surprised by the stock market drop, claiming it would have a positive long term affect on Internet stocks.

Spinks said: "No-one is surprised, it has always been a question of when not if it will happen. This is very positive for the industry as a whole. It is not positive for the consumer or those with funds invested, but it will hopefully end the excessive overvaluation of certain stocks."

Durlacher's Muller-Veerse agreed: "This is not the bubble bursting, it is a shake-up of the Internet business model. It will be a few days before investors get their confidence back and then they will start to differentiate between companies that make revenue and those that don't. At the moment many will invest in anything."

The Frankfurt DAX rallied in the last hour to 7141.61.