European markets end mixed
April 3, 2002 Posted: 12:13 PM EST
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| A trader checks share prices at the Frankfurt Stock Exchange |
LONDON, England (Reuters) - European stocks ended mixed Wednesday as investors bought chemicals and insurers but sold technology shares following profit warnings from U.S. firms.
Among anticipation of an economic recovery, Swiss-Swedish engineering group ABB was among Europe's major standouts, jumping 12.7 percent after news it had averted the immediate threat of a cash crunch. It also reassured investors by announcing asset sale plans.
Escalating violence in the Middle East helped ensure a cautious session although some observers said it was not at the forefront of most investors' minds.
"To be absolutely ruthless, what's going on in the Middle East is terrible but it's not going to effect the earnings of many European and U.S. companies," said Michael O'Sullivan,
European strategist at Commerzbank in London.
"Obviously the point of impact is oil but it's more a sentiment issue than anything else and in the short and medium term it shouldn't be too negative."
By 1622 GMT, with most European markets closed, the FTSE Eurotop 300 index of pan-European blue chips was 0.11 percent loser while the narrower DJ Euro Stoxx 50 index was up 0.16 percent.
Europe's benchmark indices are marooned in their four-month trading range and are virtually flat for the year.
On Wall Street, the Dow Jones industrial average and the Nasdaq Composite, laced with technology stocks, were both around 0.5 percent lower.
Chemicals flying high
Europe's chemical sector hit a high for the year amid fresh takeover talk and hopes that positive economic data would feed through to profits soon.
Shares in Dutch chemicals group DSM NV rose 2.6 percent after it revealed it had sold its petrochemical activities to Saudi Arabian conglomerate Sabic for a higher-than-expected 2.25 billion euros.
And shares in specialty chemical maker Rhodia jumped 5.7 percent on speculation that DSM might use the money from its Saudi sale to buy the French company -- even though DSM said it was no longer interested.
European chemical leader BASF joined in the sectoral party, gaining 2.1 percent while Swiss specialty chemical firm Clariant shot up 4.4 percent.
The companies were also helped by a statement from top American chemicals company DuPont, which said its first-quarter earnings would beat Wall Street's most optimistic estimates.
Insurers were strong as investors sought out areas of the market which have failed to keep pace since the start of the year.
Cyclical shares are up sharply in recent months but market participants are divided over whether the economy-sensitive sectors have fully discounted improved economic prospects.
"The market doesn't feel like its going anywhere in the next couple of months. The rewards are in stock picking and catching the next sector rotation," said Paul O'Connor a proprietary trader at CSFB.
"Traditional cyclicals probably don't have much more upside potential so I'm looking at the growth/non-tech areas such as drugs, aerospace and the less high-octane financials like
mortgage banks and life assurers."
Zurich Financial was Europe's biggest blue-chip gainer, tacking on 2.6 percent, while Britain's Prudential and Italy's Generali were also strong.
Shares in Swiss drugmaker Novartis, formed by the merger of Sandoz and Ciba-Geigy in 1996, dropped 1.7 percent after the Sandoz family said it had sold 23 million shares in the company.
Also on the downside, technology was among the biggest losers.
In the U.S. on Tuesday, a key brokerage voiced caution on leading names like Microsoft Corp., while on Wednesday a number of second-tier tech firms such as Internet software maker Interwoven warned of disappointing results.
Europe's biggest software maker SAP slipped 2.4 percent, hit by a warning from its U.S. partner Commerce One of lower-than-expected revenues in the first quarter.
The news prompted SAP to reiterate its 2002 sales and earnings targets.
