Dollar drags Europe off peak
 |
Story Tools
|
LONDON, England (Reuters) -- European shares closed in negative territory on Tuesday, unable to sustain an early rise to new 2003 highs as weakness in British banks such as Barclays and a further fall in the dollar tempered the market's enthusiasm.
Blue chips on Wall Street also edged off Monday's 18-month peak as the market awaited key jobs data due at the end of the week.
Strong data in both Europe and the United States in recent weeks has given equity bulls greater confidence that an economic recovery will herald improvements in corporate profits and further market gains in the months ahead.
But as the economic recovery gathers pace and the stock market rally matures, investors are becoming increasingly focused on picking individual stocks with solid prospects, rather than broad-based sector or index buying.
"Much like everyone else, I'm trying to construct a portfolio that is going to benefit from improving economic trends but isn't too exposed to a weak dollar and isn't too expensive," said Nicholas Williams, a European fund manager at Singer & Friedlander Asset Management.
A broad-based slide in the dollar sparked a late sell-off in equities on Tuesday. The euro hit an all-time high near $1.2090, helping to boost safe-haven gold prices in Europe to their highest level in more than 7-1/2 years.
The FTSE Eurotop 300 index closed 0.6 percent lower at 940 points, having hit a new 2003 high of 948.52 in morning trade. Declining stocks outnumbered gainers by about four-to-three and volume was a healthy 2.9 billion euros.
The narrower DJ Euro Stoxx 50 index ended down 0.3 percent at 2,666 points.
Wither 2004?
With the major European indexes having climbed some 40 percent from six-year lows touched in March, strategists are eyeing more modest gains for 2004.
"I think it's going to be harder to make money next year than it was this year," Williams said.
"In the short term, December is a good month for equity markets and it looks like people are trying to get money in, so you'd probably have to have a pretty good reason to be a seller now. Hence, I'm not."
SG Equity Research remained bullish on European shares for 2004, forecasting a potential upside of 17 percent in the DJ Euro Stoxx 50 and as much as 21 percent for Frankfurt's DAX index.
"Germany remains our favourite country, due to the ongoing and far-reaching economic reform, which is very positive for listed blue chips," it said in a report.
Frankfurt's DAX closed 0.3 percent weaker, while elsewhere in Europe, London's FTSE 100 closed 0.7 percent lower, Paris's CAC-40 ended down 0.5 percent and Zurich's SMI was up 0.1 percent.
In New York, the blue-chip Dow Jones industrial average was 0.3 percent weaker at 9,869 points, while the Nasdaq Composite Index was flat at 1,990 points by 1639 GMT.
Banks withdraw, autos dented
Barclays fell 2.0 percent as news its full-year profit would beat market forecasts failed to inspire investors, who had been hoping for an even more upbeat outlook.
Some analysts said there were concerns that rising UK interest rates would push up bad loans at Britain's third-largest bank.
Other British banks were also weaker, with HBOS down 2.4 percent and HSBC off 1.7 percent.
Autos fell as the weak dollar heightened concerns about their key U.S. market.
Luxury car maker BMW shed 2.5 percent and DaimlerChrysler skidded 1.0 percent lower but Porsche outperformed, gaining 0.5 percent after reporting a 58 percent rise in November sales to the United States.
Services conglomerate Rentokil Initial was one of the session's biggest decliners, sliding 6.1 percent after saying demand for its key washroom services unit had slowed, despite promising an increased dividend in 2004.
On the positive side, Swedish savings firm Skandia rallied 3.4 percent after a newspaper article rekindled longstanding speculation Finnish bancassurer Sampo might make a takeover bid. Sampo, which owns 7.4 percent of Skandia, repeated that its interest in the firm was only financial.
Britain's biggest home improvements retailer, Kingfisher, rose 2.7 percent on renewed speculation the company could be a takeover target for U.S. rival Home Depot.
GlaxoSmithKline, Europe's largest drugmaker, edged 0.2 percent higher ahead of its keenly awaited research and development day for investors on Wednesday.
Copyright 2003
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
