Europe bourses end lower
April 2, 2002 Posted: 11:23 AM EST
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LONDON, England (Reuters) - Most European markets closed lower on Tuesday, pummeled by falling technology stocks after Finland's Nokia and several U.S. bellwethers were hit by negative broker comment.
Firm oil and basic resource stocks helped stem the losses, but many players kept to the sidelines, unsure if the quarterly earnings season kicking-off on Wall Street next week would offer clear evidence that economic recovery was feeding through into higher corporate profits.
"We're still expecting this quarter to be fairly much line with what we saw in the first quarter," said Roland Gagnon, European equity strategist at CDC-Ixis Securities in Paris, who added that earnings forecasts should at least improve once the first quarter earnings were out of the way.
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"We think visibility should return by the end of May or early June."
By 1555 GMT, with most European markets closed, the FTSE Eurotop 300 index of pan-European blue chips was down 0.6 percent while the narrower DJ Euro Stoxx 50 index was off over one percent.
European benchmarks closed at seven-month highs in the first quarter but have largely traded sideways within a broad trading range since early November and barely eked out gains since the start of the year, despite growing evidence of economic recovery both in Europe and the United States.
On Wall Street, the Dow Jones industrial average was 0.65 percent lower, the broader Standard & Poor's 500 Index shed 0.73 percent and the tech-laden Nasdaq Composite dropped more than two percent.
Techs, cars and banks slammed
Mobile phone leader Nokia was Europe's biggest blue-chip casualty, dropping 4.7 percent after Credit Suisse First Boston cut its rating on the stock to "buy" from "strong buy," citing expectations of declining revenue estimates.
But also burdening the DJ Stoxx technology index, which fell 2.93 percent and was the worst-performing sector, was the decision by Goldman Sachs to cut its earnings estimates for software doyen, Microsoft Corp.. Goldman also cut its sales targets for hardware giants IBM and Sun Microsystems, citing a muted recovery in tech spending.
The other big downer for tech was a profit warning from U.S. software maker PeopleSoft, which blamed its weak product sales on a cautious technology spending environment.
That sparked selling in Europe's largest software maker, Germany's SAP, which fell over five percent. Deutsche Bank removed SAP from its European Focus List of top picks.
Also weaker were car makers and banks.
The DJ Stoxx auto index slammed on the brakes following its recent gains, shedding 1.74 percent.
Renault tumbled 6.27 percent on dilution worries after the French government said it was selling up to 10.7 percent of the firm's capital as part of a deal to facilitate links between
Renault and its Japanese partner Nissan Motor.
German carmakers DaimlerChrysler and Volkswagen were all weak as members of Germany's second largest union, IG Metall, staged warning strikes over wage claims.
Banks also fell as investors fretted over the likely impact on lending margins if interest rates are hiked later this year. Sector leader HSBC lost 2.22 percent, helping drag the DJ
Stoxx bank index down to a 0.66 percent loss.
Britain's Enterprise Oil was among the session's most impressive stand-outs, adding 15.9 percent after Royal Dutch/Shell said it would buy the firm.
The stock hit 729 pence per share, edging above the 725 pence which Shell said it would pay for each Enterprise share.
Italian oil and gas group Eni was Europe's biggest oil blue-chip gainer, adding 1.38 percent. It had been widely touted as a likely buyer of Enterprise Oil and traders in Milan said it was benefiting from the realisation the company would not now have to fork out for the acquisition.
Oil majors also outperformed as Brent crude oil futures jumped above $26 a barrel for the first time in six months on the back of escalating violence in the Middle East, which also
pushed up gold prices and lifted mining stocks.
Energy and basic resources were two of only four gainers among the DJ Stoxx index of sectors.
Second behind Enterprise Oil on the FTSE Eurotop leaderboard was SES Global after the world's biggest satellite operator reported a 12.1 percent gain in 2001 core earnings.
Shares in the Luxembourg-based group leapt 7.82 percent.
