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Bomb blast knocks Europe markets
LONDON, England (CNN) -- European markets slid to near last week's six-year lows after a bomb blast killed more than 20 people in the Philippines ahead of a potential U.S.-led war with Iraq. "The market is nervous and finds it difficult to shrug off news like this," Robert Kerr, European equity strategist at Banc of America, told Reuters after the bomb blast. "It's bringing people right back to where we were with the Bali bombing -- that even if we go to war with Iraq, the problem of terrorism won't go away," another European equities dealer told Reuters. Auto stocks such as Germany's BMW (FBMW) and France's Renault were among Europe's biggest fallers after data showed a slump in sales in the key U.S. market. Amsterdam underperformed other markets as the accounting irregularities revealed last week at Dutch grocer Ahold continued to pummel the stock and as insurers Aegon and ING were hit by fears about their exposure to Ahold's bonds and falling stock markets. London's FTSE 100 closed down 1.61 percent at 3,625.30 while the CAC 40 blue chip index in Paris shed 3.11 percent to 2,676.34. The Swiss SMI was down even further, 3.37 percent at 4046.00. Two hours before its close Frankfurt's Xetra Dax was down 1.84 percent at 2,502.77. The FTSE Eurotop 300 index of pan-European blue chips was down 2.0 percent at 753 points as falling stocks trounced risers by around eight to one. That left the benchmark index just five points off last Wednesday's trough, its lowest close since January 1997. The narrower DJ Euro Stoxx 50 index dropped 2.3 percent to 2,092 points. Increased activity by private equity funds signalled assets were cheap at current prices, even though weak trading volumes showed institutional investors remained reluctant to buy stocks, Nick Nelson, an equities strategist at CSFB, told Reuters. "It's hard to see any immediate catalyst out there that would change things because of the looming threat of a U.S.-led war in Iraq," he said, despite widespread expectations that the European Central Bank will cut interest rates this Thursday. Autos skidThe DJ Stoxx auto index was easily the region's weakest sector, tumbling almost six percent on the back of deteriorating sentiment in the United States, where light vehicle sales sank Auto seven percent last month. German luxury car manufacturer Porsche slid 14 percent after it said its U.S. sales sank 37 percent last month. The company sells about half of its cars in North America. Bigger rivals BMW, Renault, and Peugeot slid between six and 8.5 percent each. Also doing badly was the equity-heavy insurance sector, where stocks continued to be subdued by worries about their exposure to sinking equities. Axa, Allianz and Swiss Re fell between 4.9 percent and 5.9 percent each. Dutch giants ING and Aegon, which were further burdened by Ahold-linked concerns, both fell nearly seven percent. Ahold dropped 9.7 percent as the U.S. authorities widened their investigations into the scandal-tainted Dutch retail giant. Smaller British peer Britannic bucked the trend and leapt nearly 16 percent as the group reassured investors it could maintain solvency margins. Among other big fallers, TUI shares sank 6.7 percent to their lowest level in over a decade after Europe's largest travel firm said group bookings for the summer season were slightly below the previous year's level. UBS Warburg also slashed its price target on the stock to seven from 11 euros. Fear of a war in Iraq has hit the tourism industry particularly hard in recent months, with many clients putting off travel plans. Meanwhile, French advertising group Havas tumbled 9.1 percent amid signs a slump in its industry will not end this year and on renewed concerns over its convertible bonds.
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