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Europe hurt by profit woes
LONDON, England (CNN) -- European markets ended in negative territory on Thursday as new concerns over corporate profits on both sides of the Atlantic overshadowed positive news from the insurance sector. Investors' sentiment was also hampered by early declines Wall Street, which -- like European -- was rocked by a warning from computer services giant Electronic Data Systems. News of that housing starts in the United States fell in August and jobless claims declined slightly last week, but remained above the benchmark 400,000 level, also pressured stocks. London's FTSE 100 fell 1.3 percent to 3,813.5 and the CAC 40 blue chip index in Paris lost 2.5 percent to 2,927.18, while Frankfurt's electronically traded Xetra Dax was down 2.8 percent to 3,038.76 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 1.8 percent to 847.96 -- closing in on a five-year low for the first time since July. "The [U.S.] data is a bit on the gloomy side. The jobless claims number shows that the employment market is getting a little bit worse," Matthew Wickens, a global economist at ABN AMRO, told Reuters. "It shows that companies are still cautious about their sales prospects and are not hiring. It could signal another round of job cuts is on the horizon but I think the more likely scenario is a 'jobless recovery'." Technology stocks stumbled after Electronic Data Systems late on Wednesday cut its third-quarter earnings outlook, saying companies are continuing to hold the line on IT spending. (Full story) SAP [FSE:FSAP], Europe's biggest software company, fell 5.9 percent to 53.45 euros in late Frankfurt trading after investment bank Morgan Stanley cut its price target for the stock to 60 euros from 65 euros. The region's biggest computer services group CAP Gemini [PAR:PCAP] fell 8.2 percent to 21.20 euros in Paris. The semi-conductor sector also came under pressure, with France's STMicroelectronics [PAR:PSTM], Europe's largest chip maker, falling 2.4 percent to 15.23 euros. Germany's Infineon Technologies [FSE:FIFX], the region's No. 2, was down 3.3 percent to 7.64 euros in late Frankfurt trading. Alcatel [PAR:PCGE], the French telecoms equipment maker, dropped 17.7 percent to 2.51 euros. Meanwhile, some major insurers managed to reverse their downward spiral -- sparked by concerns that more companies in the sector may need to ask investors for additional money to prop up ailing balance sheets. Europe's biggest insurer Allianz [FSE:FALZ] was up 1.8 percent to 91.50 euros in late Frankfurt trading after it reassured investors that it would not need to raise money. No. 2 insurer Axa [PAR:PCS], which also said it would not issue new shares despite falling markets, gained 0.8 percent to 10.45 euros in Paris. (Full story) Britain's AVIVA [LSE:AV] gained 3.9 percent to 359.45 pence. However, Germany's Munich Re [FSE:FMUV2], the world's biggest re-insurer, was down 2.1 percent to 134 euros in late trading. Credit Suisse Group, Switzerland's second-largest bank, initially soared before falling 5.6 percent to 30.60 Swiss francs after its chief executive decided to step down amid growing pressure to turn around the bank. (Full story) Sodexho Alliance [PAR:PSW] dived 30.1 percent to 19.25 euros after Europe's second-largest caterer warned management and accounting problems at its British unit meant it would undershoot its profit target by as much as 14 percent. (Full story) Its biggest rival Compass Group [LSE:CPG] of the UK slid 1.8 percent to 271.52 pence in London. The AEX index in Amsterdam fell 1.9 percent and Milan's MIB30 index lost 2.1 percent, while the SMI in Zurich declined 1.5 percent. In the U.S. on Thursday, stocks fell in early trading after a huge warning from tech component Electronic Data Systems also shattered investor confidence in rival IBM, spinning the major indexes downward. At 1430 GMT, the Dow Jones industrial average was down 101.95 points to 8,070.50 and the Nasdaq composite index was 15.22 points lower at 1,236.91. The Standard & Poor's 500 index dropped 11.67 points to 857.79. (Full report)
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