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Europe cuts losses after U.S. data
LONDON, England (CNN) -- European markets cut their losses on Tuesday as insurance and tech stocks rebounded after a better-than-expected U.S. consumer report helped distract investors from the threat of war in the Gulf. The Conference Board said U.S. consumer confidence fell in September for a fourth consecutive month, although the decline was not a steep as anticipated, helping to lift Wall Street in early trading ahead of an interest rate decision by the Federal Reserve. The U.S. data came after Britain presented its case supporting a possible attack on Iraq, which rattled investors and sent stock tumbling. Prime Minister Tony Blair told an emergency session of parliament that Iraq continues to be a threat to the international community, presenting a dossier that he says shows Saddam Hussein has retained chemical and biological weapons and is prepared to use them. (Full story) London's FTSE 100 lost 1.8 percent to 3,671.1 after falling to a six-year low on Monday due to concerns over corporate earnings. The CAC 40 blue chip index in Paris also fell 1.8 percent to 2,742.81. On Monday, it dropped to a near-five year low of 2,794.31 -- its lowest closing level since November 1997. Frankfurt's electronically traded Xetra Dax, which dived five percent to a five-year low on Monday, was down 2.6 percent to 2,837.81 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 1.6 percent after falling to a five-year low on Monday. "The markets are deeply oversold and starving for good news," Peter Cardillo, chief strategist at Global Partners Securities, told Reuters. " "[U.S.] consumer confidence is very important. If consumer confidence stays up then consumer spending will stay up. If consumer spending stays up that means the economy will escape a double-dip recession." Among the top losers on Tuesday was UK plumbing equipment company Wolseley [LSE:WOS]. It plunged 12.1 percent to 105.25 pence after strong results from the group were overshadowed by asbestos worries. Schroder Salomon Smith Barney cut its rating on the company after Wolseley said it had been facing asbestos litigation in the United States, although it added all settled claims had been met by insurance and the costs were not material. (Full story) Anglo-Swedish drugmaker AstraZeneca [LSE:AZN] fell 4 percent to 1,799 pence after the company's chief executive said there were real issues over the design of clinical trials for its new lung cancer drug Iressa.
Europe's largest computer services company Cap Gemini [PAR:PCAP] fell 9.2 percent to 17.52 euros. In the telecom sector, France Telecom [PAR:PFTE] dropped 8.2 percent to 17.52 euros amid concerns about the company's debt pile and little news on how the French government could bail Europe's second-largest phone company. Deutsche Telekom [LSE:FDTE] was down 0.9 percent to 9.04 euros after sources told Reuters the German company had received bids for its cable television assets of about 1 billion euros less than its expectations. Europe's biggest phone company, which has debts of 64 billion euros, had hoped to raise up to 3.5 billion euros. Orange [PAR:PORA], the French mobile phone operator, declined 2.9 percent to 4.66 euros, off its lows for the session. On Tuesday, the head of Orange told reporter that the group could miss its revenue growth target of 15 percent this year. Meanwhile, some stocks managed to rebound from earlier losses in the session. Among them was Alcatel [PAR:PCGE], the French telecoms equipment maker. It gained 2.6 percent to 2.36 euros -- reversing a slide that followed Friday's news that it would cut more jobs and miss its quarterly profit target. SAP [FSE:FSAP], Europe's biggest software company. It was up 0.8 percent to 51.80 euros in late Frankfurt trading. Siemens [FSE:FSIE], the German engineering and technology group, was up 0.9 percent to 36.64 euros in late trading after the company said it would restructure its ICN telecoms network division, resulting in 2,300 previously announced job losses. The insurance sector, which has been battered recently because of its large equities holdings, managed to show some reliance on Tuesday after stocks fell earlier in the session. The UK's Aviva [LSE:AV] rose 1.2 percent to 331.63 euros and Prudential [LSE:PRU] added 1.8 percent to 339 pence. Zurich Financial gained 2.9 percent to 124.50 Swiss francs and Germany's Allianz [FSE:ALVG] was up 0.1 percent to 95.65 euros in late Frankfurt trading. However, Germany's Munich Re [FSE:FMUV2], Europe's biggest reinsurer, was down 8.4 percent to 110.58 euros in late trading, while Swiss Re lost 1.8 percent to 74.50 Swiss francs. Media giant Vivendi Universal [PAR:PEX] slipped 0.7 percent to 11.97 euros after sources told Reuters that the company had agreed to sell its loss-making Italian pay-TV unit Telepiu to Rupert Murdoch's News Corp. Reuters said the group had been valued at 800 million euros in discussion, less than the original 1.5 billion euro price agreed. (Full story) Vivendi Environnement, in which media group Vivendi Universal holds a stake of more than 40 percent, fell 5.4 percent to 18 euros. The French water and waste company posted a 22.5 percent drop in first half profit. (Full story) The AEX index in Amsterdam slipped 0.3 percent and Milan's MIB30 index was flat, while the SMI in Zurich gained 0.1 percent. In the U.S. on Tuesday, blue chips came off their lows in early trading as a better-than-expected consumer confidence report helped dilute weak forecasts from tech companies, rising oil prices and nervousness surrounding the Federal Reserve's latest policy setting meeting. At 1430 GMT, the Dow Jones industrial average was down 53.55 points to 7,818.60 after falling as much as 132 points in the first minutes of trading. The Nasdaq composite, which closed at a six-year low Monday, was up 12.71 points to 1,197.64. The Standard & Poor's 500 index was 1.29 points lower to 832.41.
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