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Europe tumbles on profit woes
LONDON, England (CNN) -- European markets tumbled to a close on Monday, led by technology and insurance stocks, as concerns deepened over corporate earnings, economic recovery and the threat of war in Iraq. Investors were also rattled as Wall Street, which has declined for five straight weeks, continued to spiral lower in early trading on Monday. Still, European markets managed to finish off their lows for the session. London's FTSE 100 ended down 4.8 percent, or 185.4 points, to 3,721.8 and the CAC 40 blue chip index in Paris dropped 5.9 percent, or 173.07 points, to 2,777.45. Frankfurt's electronically traded Xetra Dax was down 5 percent, or 144.65 points, to 2,774.25 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 4.8 percent, with the information technology and insurance sub-sectors leading declines. "U.S. profit warning, spreading deflation, the high oil price and fears of military intervention in Iraq are all preying on people' minds," Avinash Persaus, global head of research at State Street Bank in London, told Reuters. Another possible cause of Monday's sell-off was end-of-quarter "window dressing" by fund managers looking to dump poorly performing shares in a bid to make their latest three-month performance appear better. Markets have performed poorly over the last three months -- the FTSE 100 is down more than 15 percent, the CAC40 has lost a quarter of its value, while the DAX has plunged by a third. (Full story) The European insurance sector, which has fallen by 55 percent this year, was led lower on Monday by French reinsurer Scor. On Monday, it said planned to raise 400 million euro from its shareholders, despite repeated denials of such a step. The insurer's stock plunged 30.4 percent to 7.10 euros in Paris. (Full story) Britain's Prudential (PRU), Britain's second-biggest insurer, fell 6.2 percent to 339.50 pence. On Monday, it confirmed plans to cut 850 jobs in the UK over the next two years as it sets up a customer call centre in India in an effort to save costs. (Full story) Royal & Sun Alliance (RSA) dropped 8.8 percent to 96.25 pence and Aviva (AV) lost 5.2 percent to 353.50 pence. Europe's second-largest insurer Axa (PCS) fell 9.7 percent to 9.93 euros, while the region's biggest reinsurer Munich Re (MUV2) was down 12.2 percent to 102.28 euros in late Frankfurt trading. Ericsson, the world's biggest supplier of high-speed mobile phone networks, lost 14.03 percent to 3.37 crowns after it warned that sales and orders would fall in July-September from April-June, reinforcing recent signs of a troubled industry. (Full story) Rival Nokia slid 7.2 percent to 13.45 euros. Europe's biggest consumer electronics company Philips Electronics fell 6.1 percent to 14.70 euros and the continent's biggest chip maker STMicroelectronics (PSTM) dropped 9.2 percent to 13.61 euros, while second biggest Infineon Technologies (FIFX) was down 12.7 percent to 5.56 euros in late Frankfurt trading. Cap Gemini (PCAP), Europe's biggest computer services company, lost 14.15 percent to 16.20 euros, while SAP (FSAP), Europe's largest software company, was down 2.5 percent to 45.90 euros in late trading after Merrill Lynch cut its earnings forecast for the group due to concern for its outlook in the second half and 2003. France Telecom (PFTE), which is due to announce a new chief executive on Wednesday, lost 12 percent to 6.94 euros on concerns that Europe's second-largest phone company will struggle to reduce its debt. Vodafone (VOD), Europe's biggest mobile phone company, slid 7.7 percent to 81.42 pence. British engineering and electronics group Invensys (ISYS) fell 7.3 percent to 61.67 pence after it said first-half profit would be at the bottom end of expectations and blamed dollar weakness for damping earnings in its key U.S. market. (Full story) Vivendi Universal (PEX), Europe's biggest media company, lost 12.8 percent to 11.35 euros after the Financial Times said the planned one-billion euro sale of loss-making Italian pay TV unit Telepiu was in jeopardy due to a dispute with buyer Rupert Murdoch's News Corp over the valuation of the unit. (Full story) The AEX index in Amsterdam fell 6.1 percent and Milan's MIB30 index lost 4.4 percent, while the SMI in Zurich declined 42.6 percent. In the U.S. stocks on Monday, markets slid after a much weaker-than-expected report on manufacturing activity, combined with bearish news from the retail sector. Wal-Mart Stores Inc., Federated Department Stores and J.C. Penney issued some cloudy guidance Monday for same-store sales as warm weather hurt autumn clothing sales. (Full story) That was followed by new data showing manufacturing in the U.S. Midwest contracted in September for the first time since February, feeding concerns that economic recovery is faltering. (Full story) At 1450 GMT, the Dow Jones industrial average was down 191.78 points to 7509.67, while the tech-heavy Nasdaq composite was down 32.64 points to 1166.52.
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