Europe slips on telecom concerns

LONDON, England (CNN) -- European markets ended lower on Tuesday as ongoing concerns about the telecom sector overshadowed positive results from chipmakers Infineon and STMicroelectronics.

Ericsson, the world's biggest maker of mobile phone equipment, again led the declines. Its shares fell 4.4 percent on Tuesday, adding to the 24 percent loss the previous day when it posted weak quarterly results, announced 20,000 more job cuts and said it would sell $3 billion in new shares.

Rival Nokia, the world's biggest mobile phone maker, managed to recoup most of its losses, ending down 0.3 percent.

London's FTSE 100 fell 0.6 percent to 5,191, while the CAC 40 blue chip index in Paris rose 0.1 percent to 4,561.85 and Frankfurt's electronically traded Xetra Dax was down 0.3 percent to 5,188.92 in late trading (the German market was set to close at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, lost 0.4 percent, with the telecom sector leading the declines.

"People are getting out of telecom equipment and seeking out more defensive areas," John Hatherly, head of global analysis at M&G Asset Management, told Reuters. "Chip and software stocks are seeing some interest but very, very selective buying as the recovery there is fragile."

Infineon Technologies (FIFX), Europe's second-largest chipmaker, said on Tuesday it saw signs that demand is recovering. It also said its second-quarter loss narrowed to 108 million euros ($96 million) from a loss of 331 million euros in the first three months of its financial year. Infineon share were down 1.3 percent after posting early gains.

STMicroelectronics (FSTM), Infineon's bigger rival, said late on Monday first-quarter net income dropped 29 percent to $32.9 million but expected sales in the second quarter to rise 10 percent higher than the previous three months. Its shares were up 3.1 percent in late Frankfurt trading.

Philips Electronics, Europe's No. 3 chipmaker and biggest consumer electronics company, rose 1.8 percent and the region's biggest semiconductor designer ARM Holdings (ARM) gained 0.4 percent in London.

Deutsche Telekom (FDTE), was down 1.6 percent in Frankfurt after presenting its annual report for 2001. It showed a net loss of 3.45 billion euros ($3.1 billion) and the group said profits rose marginally in the first quarter of this year.

In Amsterdam the AEX index rose 0.1 percent and Milan's MIB30 index was flat, while the SMI in Zurich was down 0.2 percent.

In the U.S. on Tuesday, losses by Exxon Mobil and DuPont held the Dow Jones to small gains at midday after quarterly profits at both companies fell short of expectations. The Nasdaq was also little changed as disappointing results from WorldCom and Ericsson on Monday continued to hamper telecom stocks.

At midday, the Dow Jones industrial average was up 13.1 points, or 0.1 percent, to 10,149.51, while the Nasdaq composite index was down 4.55 points, or 0.2 percent, to 1,754.13.