Europe claws back losses

LONDON, England (CNN) -- European markets ended mixed on Tuesday after comments by U.S. Federal Reserve Chairman Alan Greenspan provided a soothing effect on markets on both sides of the Atlantic.

In testimony to Congress, Greenapn expressed optimism about the health of the U.S. economy, but acknowledged that corporate scandals had indirectly hurt business spending and he called for tougher penalties for chief executives who break the law.

He said increases in U.S. household spending, a strong housing market and lower company inventories all pointed to a rebound in production. (Full story)

London's FTSE 100 gained 0.7 percent to 4,021.9 after falling to 3,860.3 -- its lowest since September 1996 -- earlier in the session. On Monday, Europe's most valuable stock market index dropped 5.4 percent, its biggest one-day percentage fall since a 5.7 percent loss on September 11.

The CAC 40 blue chip index in Paris lost 0.2 percent to 3,317.81, while Frankfurt's electronically traded Xetra Dax was up 0.2 percent to 3,921.82 in late trading (the German market is set to close at 1800 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 0.3 percent.

The pharmaceutical sector was led lower by GlaxoSmithKline (GSK), the world's second-largest drug company. It closed down 2.4 percent to 1,110 pence -- off its session lows -- following news that a generic version of its top-selling drug Augmentin had been launched in the U.S., earlier than some analysts expected. (Full story)

Swiss drug giant Novartis' Geneva Pharmaceuticals unit announced late on Monday that it had started distributing a copycat form of the treatment in the United States. Novartis shares were down 3.4 percent to 56 Swiss francs in Zurich.

The UK's Shire Pharamceutical (SHP) lost 3.3 percent to 524.90 pence and Germany's Bayer (BA) was down 1 percent to 27.07 euros in late Frankfurt trading.

Deutsche Telekom (FDTE) was up 6.7 percent to 10.99 euros in late Frankfurt trading after chief executive Ron Sommer resigned following a special meeting of the group's supervisory board in Bonn. Deutsche Telekom had clocked up its biggest one-day fall on Monday since the 1996 flotation, falling 13.4 percent and lopping 30 points off the DAX index. (Full story) France Telecom (PFTE) rose 7.3 percent to 13.68 euros.

Philips Electronics, Europe's biggest consumer electronics company, helped lift the tech sector off its lows. It rose 1.3 percent to 23.50 euros after posting a $1.4 billion second-quarter loss on Tuesday but saying it expected improvements in "virtually all" its businesses. (Full story)

DaimlerChrysler (FDCX), the world's fifth-largest automaker, was up 3.3 percent to 45.13 euros in late Frankfurt trading after Reuters said it would raise it profits forecasts for 2002. (Full story)

P&O Princess Cruises (POC) jumped 10.5 percent to 392.35 pence after Reuters quoted sources as saying that European regulators will approve a £3.5 billion hostile bid from cruise ship giant Carnival (CCL).

The AEX index in Amsterdam slipped 1.1 percent, while Milan's MIB30 index was up 0. 5 percent and the SMI in Zurich fell 3.5 percent.

In the U.S. on Tuesday, Greenspan's upbeat comments on U.S. economy and criticism of corporate fraud helped to ease concerns over profits and accounting concerns.

At midday, the Dow Jones industrial average was down 42.85 points, or 0.5 percent, to 8,596.34, while the Nasdaq composite index was up 18.49 points, or 13 percent, to 1,401.11.