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Euro surge hits European stocks
LONDON, England (CNN) -- European stock markets ended a downbeat week in the doldrums again Friday after the euro surged beyond its 1999 launch level against the dollar. London's FTSE 100 ended down 0.27 percent at 3,979.80 while the CAC-40 blue chip index in Paris closed 0.21 percent off at 2,897.16. At 1615 GMT Frankfurt's Xetra Dax was down 1.22 percent at 2,830.37. The Zurich SMI was virtually unchanged, up just 0.07 percent at 4,574.00. With only Frankfurt still officially open, the FTSE Eurotop 300 index of pan-European blue chips was down 0.6 percent at 803 points and the euro zone Euro Stoxx 50 index shed 0.6 percent. The Eurotop 300 is down about three percent on the week. A strong euro is bad news for exporters as goods and services become more expensive to sell abroad. (Full story) Among the worst hit Friday were currency-sensitive insurance and auto stocks. Dutch group Aegon led the insurance decliners while Germany's Volkswagen and DaimlerChrysler led auto shares down, ensuring stock indices in Amsterdam and Frankfurt underperformed the rest of the region. Shares generally ended off their lows thanks to a steady performance on Wall Street. But strategists said they were less than confident about the outlook for company profits and for markets, having seen regional benchmark indexes retrace about a quarter of the 20 to 25 percent gains made since plunging to six-year lows in March. "The macro outlook is pretty difficult, particularly in Europe, where the corporate sector is facing this massive increase in the euro in a very short order of time," Gary Dugan, European equities strategist at JP Morgan Private Bank, told Reuters. Dealers said investors were also closing positions before a three-day weekend for U.S. and British markets, with the threat of more terror attacks at the back of people's minds. Markets in both countries will be closed on Monday. Dutch Aegon and British rival Prudential fell 7.7 percent and 3.2 percent respectively after broker Morgan Stanley warned on Wednesday that a weak dollar could further dent their already fragile earnings. German insurer Allianz fell 4.2 percent after investment bank JP Morgan cut its rating of the stock to "neutral" from "overweight" due to the risk of a credit-rating downgrade. Daimler and Volkswagen led a slide in auto stocks, with losses of around 2.0 percent each, on concerns a strong euro would make it harder to sell cars abroad and reduce the value of any repatriated earnings. Telecom Italia rose two percent, helped by expectations that virtually all of a 9 billion-euro pot to sweeten a merger with Olivetti will be spent on Telecom Italia stock because shares in Olivetti had closed above their expected tender price. Meanwhile, shares in Europe's mobile phone leader Vodafone climbed 2.2 percent as investors looked ahead to its full-year results next week in an optimistic frame of mind. Vodafone reports in sterling, which has also depreciated against the euro, and around half of its sales are generated in the euro zone, meaning it could receive a fillip from recent foreign-exchange trends. Shares in Credit Agricole surged 6.8 percent as analysts speculated that funds were switching into the French banking stock after merger partner Credit Lyonnais was temporarily removed from Paris's CAC-40 benchmark index, before the merger deal's closure. Shares in British advertising giant WPP jumped 4.0 percent as the advance-buying season for television commercials in the United States hit record levels. Next week's holiday-shortened schedule of economic data is light, aside from the German Ifo business climate survey Monday.
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