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Euro stocks in broad-based slide
LONDON, England -- UK insurer Prudential and oil and technology stocks led a broad slide in European shares Friday, with worry over SARS and the U.S. economy compounding the gloom. Patchy economic numbers from the U.S. hit sentiment, fueling doubt that the strong advance from March's six-year lows had much further to run. Wall Street's steep dive in morning trading added to the pessimism. "The market, especially in the States, has done well for the month so far, so it's logical that some selling pressure came in when some economic numbers disappointed," Lex Werkheim of Eureffect asset management in Amsterdam told Reuters. London's FTSE 100 closed down 0.74 percent at 3,870.20, while the CAC 40 blue chip index in Paris ended down 1.25 percent at 2,866.74. The Swiss SMI ended down 1.14 percent at 4,467.40. At 1540 GMT, the Frankfurt Xetra DAX was down 1.87 percent at 2,837.48. At the same time, with only Frankfurt still trading, the broader-based FTSE Eurotop 300 index was 1.2 percent lower at 807 points, while the narrower DJ Euro Stoxx 50 index had shed 1.7 percent to 2,271. "We will have to swallow next week's earnings, and then we will live from economic number to economic number to see if, in the post-war period, there is proof of consumers coming back," Werkheim said. The pullback was broad, with most sectors under water as declining issues outpaced advancers by nearly three to one in thin volume. Defensive drug stock GlaxoSmithKline, Aventis and AstraZeneca were strong ahead of their earnings next Wednesday. The Eurotop 300 is down 1.3 percent for the week after hitting a three-month high on Wednesday. The construction sector was a bright spot as French glass and building materials group Saint-Gobain rose 6.6 percent to 29.99 euros as investors cheered slightly better-than-expected quarterly sales. There was concern that the SARS flu-like virus, which has killed more than 270 people, mostly in Asia, will deter tourism and dent earnings growth for airlines such as British Airways and travel groups like Germany's TUI. Shares in Dutch airline KLM sank 7.9 percent to 6.54 euros after announcing it was reducing the number of flights to Asia as SARS hits demand. Prudential, the UK's second-largest insurer, dropped 3.8 percent to 354-3/4 pence, hit by Morgan Stanley investment bank cutting its rating on the stock to "underweight" from "equal-weight." The bank said the group would need more capital or would have to cut its dividend further. Swiss financial giant Credit Suisse jumped 5.3 percent to 30.55 Swiss francs after staging a strong recovery in profitability during the first quarter. (Full story) German drug group Bayer (FBAY) rose 0.7 percent to 16.62 euros after it forecast a double-digit rise in annual profit and said it had settled out of court many more lawsuits over anti-cholesterol drug Baycol. (Full story) Technology shares appeared ripe for some profit-taking. They, along with telecoms, are the only sector in higher territory for the year. Philips Electronics shed 4.2 percent to 15.95 euros, while handset maker Nokia was down 3.9 percent at 14.58 euros. A clutch of funky new models at France's Renault failed to offset slack European demand as first-quarter sales at the carmaker slid 2.9 percent, but the stock rose one percent to 36.85 euros as its stake in Japan's Nissan looks profitable. In the auto sector, Volkswagen sagged 7.6 percent to 31.45 euros as it traded ex-dividend. French rival Peugeot skidded 2.5 percent to 39.74 euros, despite posting a three percent rise in first-quarter revenues, after Merrill Lynch trimmed its target price on the stock to 50 from 54 euros. Sector leader DaimlerChrysler shed 2.4 percent to 28.60 euros. Bear Stearns lowered its profit forecast for the group a day after the automaker posted quarterly numbers the bank called well below its expectations. Fears that SARS could keep customers away from shops in Asia weighed on luxury goods maker LVMH and Pinault-Printemps Redoute which owns Italian fashion house Gucci. LVMH fell one percent to 37.39 euros. In the plus column, shares in Britain's biggest electrical goods retailer Dixons stormed 11 percent higher to 111 pence in heavy trade on hopes that the outcome of an ongoing probe into the extended warranty market won't be too damaging for the group.
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