Europe tumbles on profit concerns

LONDON, England (CNN) -- European markets tumbled to near five-year lows on Wednesday, led by insurance stocks, following weak profit outlooks on both sides of the Atlantic and another negative start on Wall Street.

London's FTSE 100 fell 4 percent to 3,865.5 and the CAC 40 blue chip index in Paris lost 3.6 percent to 3,000.98, while Frankfurt's electronically traded Xetra Dax was down 5.2 percent to 3,119.24 in late trading (the German market was set to close at 1800 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 3.7 percent to 863.22 -- near a five-year low last reached in July. The insurance, information technology and banking sub-sectors were among the big decliners.

"There is still evidence that analyst forecasts of corporate earnings were still too high considering the economic backdrop," Gareth Evans, European equity strategist at ING Barings in London, told Reuters.

Swiss Life, Switzerland's biggest insurer, plunged 15.4 percent to 129.50 Swiss francs in Zurich after it announced a bigger-than-expected loss and said it would cut more jobs. (Full story)

Europe's biggest insurer Allianz (FALZ) was down 4.8 percent to 90 euros in late Frankfurt trading, No. 2 insurer Axa (PCS) dived 8.6 percent to 10.37 euros in Paris and Zurich Financial, Europe's third largest, also lost 8.6 percent to 119.50 Swiss francs.

Britain's Prudential (PRU) fell 9.2 percent to 360 pence, Aviva (AV) declined 7.7 percent to 353.79 pence and Royal & Sun Alliance (RSA) lost 5.4 percent to 111 7/8 pence,.

Germany's Munich Re (FMUV2), the world's biggest re-insurer, was down 10.3 percent to 135.50 euros in late Frankfurt trading.

The financial sector came under pressure after J.P. Morgan, the second-biggest U.S. bank, issued a third-quarter profit warning blaming a rise in bad loans. (Full story)

Barclays (BARC) fell 8.2 percent to 406.60 pence, France's biggest bank BNP Paribas (PBNP) lost 5.4 percent to 40.06 euros and Deutsche Bank (FDTE), Europe's biggest bank, was down 5.6 percent to 55.75 euros in late Frankfurt trading.

Deutsche Bank confirmed on Wednesday it was in exclusive talks with State Street Corp. to sell the U.S. company parts of its securities services business. (Full story)

The technology sector was hit after U.S. software house Oracle (ORCL) said late on Tuesday that its fiscal first quarter net profit slumped by one- third from a year ago and guided sales and profit forecasts for the current quarter to the low end of market expectations. (Full story)

SAP (FSAP), Europe's biggest software company, was down 4.7 percent to ... 55.30 euros in late Frankfurt trading, while and the region's biggest computer services company Cap Gemini (PCAP) dropped 5.2 percent to 23.10 euros. UBS Warburg cut its rating on the company's stocks to "reduce" from "hold."

Alcatel (PCGE), the French telecoms equipment maker, fell 8.7 percent to an historic low of 3.05 euros on speculation that the group would cut its second-half target. Also, Morgan Stanley cut its target price for the stock to 3 euros from 4 euros, while BNP Paribas lowered its target to 4 euros from 7 euros.

Cable & Wireless (CW), which manages Web sites for businesses, fell 4 percent to 134.65 pence after warned first-half revenue at its global business is expected to fall 6 percent as conditions remain grim. (Full story)

Among the few bright spots on Wednesday, Vivendi Universal (VEX) gained 1.6 percent to 13.42 euros after the media giant said it had won a three billion euro ($2.91 billion) loan from 11 banks, giving the group much-needed breathing space to deal with its mountain of debt. (Full story)

The AEX index in Amsterdam lost 4.9 percent and Milan's MIB30 index slipped 2.9 percent, while the SMI in Zurich declined 1.9 percent.

In the U.S. on Wednesday, weakness in financial services stocks pushed the Dow Jones lower in early trading after a warning from J.P. Morgan Chase, while technology issues got caught in turbulence triggered by cautious words from Oracle late on Tuesday.

News on the corporate front also appeared to overshadow a pair of upbeat economic updates on inflation and trade deficit. (Full story)

At 1430 GMT, the Dow Jones industrial average was down 71.10 points to 8,136.45 and the Nasdaq composite was 16.39 points lower at 1,243.55. The Standard & Poor's 500 index was down 7.59 points to 865.93. (Full report)