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Europe rattled by euro concerns
LONDON, England (CNN) -- European markets closed lower on Tuesday as a weak start on Wall Street added to jitters over the possible impact of a higher euro and rising oil prices on corporate profits. London's FTSE 100 fell 1.9 percent to 3,908.7 and the CAC 40 blue chip index in Paris lost 1.1 percent to 3,138.61, while Frankfurt's electronically traded Xetra Dax was down 1.7 percent to 3,149.4 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 1.4 percent, led lower by the retail, beverage and food sub-sectors. Investors began selling their European holdings after the dollar fell to a three-year low against the euro. The currency, which recovered slightly after the euro strengthened to $1.03, came under pressure when U.S. Secretary of State Colin Powell warned late on Monday that Iraq's 12,000-page weapons dossier, flaming fears of a possible U.S.-led war with Baghdad. (Full story) "If the dollar weakens further then European companies' competitive position will be damaged and [analysts] will start factoring it into their forecasts," Corne Biemans, a global portfolio manager at Fortis Obam, told Reuters. Oil rose Tuesday morning as strikes in Venezuela -- the world's fifth largest oil exporter -- dragged on for a third week. However, Brent Crude for February delivery eased back to $27.96 a barrel at midday in London after reaching a high of $28.17. (Full story). "The price of crude could crimp growth but these levels have been artificially inflated by war fears and the strike in the oil producer Venezuela. Saudi Arabia and possibly Russia would step into the breach and up supplies if necessary,'' Gert De Mesure, head of equity strategy at Delta Lloyd Securities in Antwerp, told Reuters. In corporate news, Britain's Cadbury Schweppes (CBRY) fell 5.2 percent to 389.96 pence -- despite notching up early gains -- after it agreed to buy Adams of the United States for around $4.2 billion, creating the world's biggest confectionery groups. (Full story) UK drug maker GlaxoSmithKline (GSK) lost 3.7 percent to 1,149 pence after it said it received fresh signals that U.S. regulators would back its asthma drug Advair to treat "smoker's cough" but the news fell short of hopes for immediate approval. (Full story) HBOS (HBOS), the UK's top mortgage lender, slid 1.9 percent to 635.42 pence after it said it expected to meet market expectations with a rise in profits this year, helped by a robust British housing market. (Full story) Sweden's AB Electrolux, the world's leading white goods maker, fell 9.4 percent to 135 crowns. On Tuesday, Chief Executive Hans Straberg said the company had been notified of 194 asbestos class action lawsuits involving 14,300 people. (Full story) British games retailer Game Group (GMG) offered a bleak outlook and added to worries about vital Christmas spending. Its stock plunged 57.2 percent to 34.4 pence after saying same-store sales so far this month were down 4.7 percent. Bucking the downward trend were France's top banks. Credit Agricole (PACA), which on Monday agreed to buy rival Credit Lyonnais for 19.5 billion euros ($19.9 billion) in cash and stock, gained 2.4 percent to 15.22 euros on Tuesday. However, Credit Lyonnais (PCL) was down 0.3 percent to 53.85 euros as investors took profits on Monday's gains. BNP Paribas (PBNP), which is France's biggest bank and owns more than 16 percent of Lyonnais, rose 1.1 percent to 41 euros. Societe Generale (PGLE), which also has a stake in Lyonnais, also gained 1.1 percent to 57.95 euros. The AEX index in Amsterdam was down 1.5 percent, Milan's MIB30 index lost 0.8 percent and the SMI in Zurich declined 0.8 percent. In the U.S. on Tuesday, stocks were mixed in early trading after a warning from McDonald's dragged on the Dow industrials, while a sharp spike in gold prices and a weak dollar put investors in a risk-averse mode. (Full report) At 1515 GMT, the Dow Jones industrial average was down 58.62 points to 8,668.78 and the Standard & Poor's 500 index slid 2.09 points to 908.31. The Nasdaq composite was up 2.58 points to 1402.91.
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