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Nokia subdues European markets
LONDON, England (CNN) -- European markets ended mainly flat on Tuesday as gains in financial stocks were tempered by declines in the telecom sector after Nokia issued a sales warning. London's FTSE 100 lost 0.2 percent to 3,925 and the CAC 40 blue chip index in Paris edged up 0.9 percent to 3,142.75, while Frankfurt's electronically traded Xetra Dax was up 3.1 percent to 3,161.73 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 up 0.4 percent. Finland's Nokia (NOK), the world's biggest maker of mobile phones, fell 3.3 percent to 17.33 euros after it warned sales would be weaker than expected in the fourth quarter as new handset models fail to galvanize consumers. (Full story) The downbeat outlook knocked other telecom stocks as well. Ericsson, the world's biggest maker of wireless infrastructure, fell 2.4 percent to 8.25 crowns in Stockholm and French telecoms equipment maker Alcatel (PCGE) lost 3.1 percent to 5.28 euros. "It is not surprising to see tech stocks such as Nokia falling back as the sector has had such a good run," Jason James, a global strategist at HSBC Securities, told Reuters. UK telecoms group Cable & Wireless (CW), which lost more than 40 percent of its value on Monday, dropped another 14.1 percent to 41.25 pence on Tuesday morning. The company was forced to seek bank guarantees for £1.5 billion after a credit rating downgrade, which threatened the cash pile that had kept investors on board. In the auto sector, Fiat, the troubled Italian industrial powerhouse, was down 3.5 percent to 8.73 euros -- erasing earlier gains -- on speculation that its shares could be diluted by a possible recapitalisation of the group. The stock initially jumped more than 3 percent after media reports in Italy said Chairman Paolo Fresco and Chief Executive Gabriele Galateri would resign. The company later confirmed that Galateri alone would be stepping down once a replacement has been found. (Full story) "First the market cheered the possible resignations and the arrival of a new top management... Now doubts of a capital increase prevail," Patrizio Pazzaglia, a fund manager at bank Insinger, told Reuters. Financial stocks managed as slight rebound as investors bought back some of the badly beaten down shares. Germany's Commerzbank (FCBK) was up 4 percent to 8.69 euros in late trading, while the UK's Alliance & Leicester (L) rose 4.5 percent to 766.50 pence and France's BNP Paribas (PBNP) gained 2.3 percent to 36.53 euros. Europe's biggest insurer Allianz (FALZ) was up 3.4 percent to 103.35 euros and the region's largest reinsurer Munich Re (FMUV2) gained 5.8 percent to 129.33 euros in late Frankfurt trading. The AEX index in Amsterdam was up 0.3 percent, Milan's MIB30 index gained 1.5 percent and the SMI in Zurich added 1 percent. In the U.S. on Tuesday, stocks were slightly higher in early trading following the previous session's sharp selloff and amid expectations the Federal Reserve will not change interest rates at its last policy-setting meeting later in the session. (Full report) At 1520 GMT, the Nasdaq composite was up 17.77 points to 1384.91 and the Dow Jones industrial average rose 27.68 points to 8501.09. The Standard & Poor's 500 index was up 3.10 points to 895.10.
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