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Europe sours on war fears
LONDON, England (CNN) -- Most European markets turned negative at midday on Thursday as a tech-led rally gave way to renewed concerns about a possible war with Iraq. After rebounding from across-the-board declines on Wednesday, markets initially rose after better-than-expected profits from U.S. computer giant Oracle. But nervousness over the U.S. government's official response later on Thursday to Baghdad's weapons disclosure and a downturn in Wall Street stock futures depressed sentiment in Europe. London's FTSE 100 was up 0.2 percent to 3,842.2, while the CAC 40 blue chip index in Paris slipped 0.4 percent to 3,063.81 and Frankfurt's electronically traded Xetra Dax fell 1.2 percent to 2,987.81. The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 0.2 percent, led lower by the insurance and computer sub-sectors. Markets began reversing earlier gains following reports the United Nations chief weapons inspector, Hans Blix, had told the Bush administration that the U.N. Monitoring, Verification and Inspection Commission had concluded Iraq's declaration failed to give a complete accounting of known chemical and biological stockpiles. (Full story) "Iraq is still impinging on the market making any move firmer. My concern is that it is going to become more of an issue as we enter next year," Khuram Chaudhry, European strategist at Merrill Lynch, told Reuters. Initial gains by tech stocks came after database software company Oracle Corp. (ORCL) reported earnings of 10 cents a share for its fiscal second quarter, flat with a year earlier but 2 cents a share above Wall Street forecasts. (Full story) But the sector gave back early advances as the mood of investors soured. STMicroelectronics (PSTM), Europe's biggest chip maker, was down 3.2 percent to 19.19 euros, while Infineon Technologies (FIFX), the region's No. 2, fell 1.9 percent to 7.06 euros and Philips Electronics, the third biggest, lost 1.9 percent to 16.76 euros. Germany's SAP (FSAP), Europe's biggest software maker, decline 1.1 percent to 80 euros, while France's Cap Gemini (PCAP), Europe's biggest computer services company, was down 2.8 percent to 22.30 euros. However, Dutch chip equipment maker ASML held onto it gains, rising 2.7 percent to 7.53 euros at midday. ASML fell on Wednesday after it said it would cut 22 percent of its workforce by July next year and sell its U.S. thermal operations in a bid to deal with a slump. (Full story) Meanwhile, luxury goods maker Gucci was up 0.2 percent to 87.60 euros in Amsterdam after it posted a 14.4 percent slide in third quarter net profit after slashing its full-year profit forecast last week. (Full story) The AEX index in Amsterdam was down 0.7 percent, the SMI in Zurich lost 0.3 percent and Milan's MIB30 index slipped 0.6 percent. In the U.S. on Wednesday, markets declined after a punishing session for technology stocks, while weakness in financial issues and concerns over corporate profits and Iraq dented all three major indexes. (Full report) The Nasdaq composite fell 30.54 points to 1361.51, while the Dow Jones industrial average lost 88.04 points to 8447.35 and the Standard & Poor's 500 index slipped 11.87 points to 891.12. Wall Street was expected to open lower later on Thursday. S&P 500 index futures were down 5.3 points to 886.20 on the Globex trading system, while fair value -- a measure that takes account of interest costs and dividend payments -- was calculated at 893.69.
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