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Europe knocked by Nokia, Barclays
LONDON, England (CNN) -- European markets sank on Tuesday after downbeat outlooks from mobile phone giant Nokia and British bank Barclays, as well as a poor start on Wall Street, sent investors on a selling spree. London's FTSE 100 fell 1.9 percent to 4,075.4 and the CAC 40 blue chip index in Paris lost 2.3 percent to 3,222.26, while Frankfurt's electronically traded Xetra Dax was down 2.4 percent to 3,299.11 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, was down 2.2 percent, led lower by the information technology and computer services sub-sectors. Nokia, the world's largest mobile phone maker, was down 6.1 percent to 18.75 euros in late trading after it issued cautious forecasts for the mobile phone and networks markets next year. (Full story) Swedish rival Ericsson lost 5.7 percent to 8.25 crowns and France's STMicroelectronics (PSTM), Europe's biggest mobile chipmaker, dropped 5.9 percent to 24.15 euros. "Nokia's comments on the global mobile handset markets were in line with our expectations but what hurts is the outlook for networks, which was well below our forecast and that is why they are dragging Ericsson down as well," one trader told Reuters. France Telecom (PFTE) lost 5.1 percent to 16.88 euros following a report that it could buy minority shareholders out of its mobile unit Orange, a scenario analysts found improbable for now. Orange (PORA) fell 5.6 percent to 7.04 euros. (Full story) The technology sector also came under pressure on Tuesday, with British accounting software firm Sage Group (SGE) falling 6.8 percent to 151.83 pence after investment bank Merrill Lynch cut its rating to "neutral" from "buy." Sage reported an 11 percent jump in profits on Tuesday, but the bank said its stock was looking expensive after recent rises. (Full story) France's Cap Gemini (PCAP), Europe's biggest computer services company, lost 6.6 percent to 29.89 euros, while German software giant SAP (FSAP) was down 4.3 percent to 86.48 euros in late Frankfurt trading. European markets began the session on a weak note after a negative finish on Wall Street on Monday, weighed down by a report showing activity in the U.S. manufacturing sector had declined for a third consecutive month. (Full story) The mood darkened after Barclays, Britain's fourth-biggest bank, said its profits this year would be at the bottom of market expectations due to bad loans -- pushing its shares down 4.2 percent to 429 pence. (Full story) UK rivals Royal Bank of Scotland (RBOS) fell 4.9 percent to 1,566.39 pence and Lloyds TSB Group (LLOY) slid 2.7 percent to 528.76 pence. In Frankfurt, Commerzbank (FCBK) was down 10 percent to 9.61 euros in late Frankfurt trading and rival HVB Group (FHVB) was off 4.8 percent to 17.23 euros. Credit rating agency Standard & Poor's said it expected German banks to perform poorly next year and this could lead to mergers. "The banking sector's prospects are inextricably linked to the outlook for the macro economy, so the sector is mainly weak today after the poor U.S. data yesterday," Pierandrea Perrone, an analyst at Nextra Asset Management, told Reuters. Meanwhile, Vivendi Universal (PEX), Europe's biggest media company, fell 5.1 percent to 15.60 euros ahead of a key meeting later on Tuesday to decide whether it would make a pre-emptive strike to take control of phone operator Cegetel. (Full story) France's Schneider Electric (PSCHN) rose 0.5 percent to 48.72 euros after it said it would sell plug and switch maker Legrand for $3.6 billion, abandoning any plans the salvage last year's deal. The European Commission blocked the deal on competition grounds. (Full story) The AEX index in Amsterdam fell 3.3 percent, Milan's MIB30 index lost 2.7 percent and the SMI in Zurich declined 2.8 percent. In the U.S. on Tuesday, stocks slid in early trading after AOL Time Warner warned that advertising and commerce revenues for 2003 would drop sharply. (Full story) News that the Securities and Exchange Commission is fining fine five investment banks for destroying e-mails also weighed on the market. (Full story) At 1520 GMT, the Dow Jones industrial average was down 98.12 points to 8764.45, while the Nasdaq composite lost 29.77 points to 1455.01 and the Standard & Poor's 500 index fell 11.05 points to 923.48. (Full report)
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