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Eurostocks 97 levels Original Source Link: (May no longer be active)
http://biz.yahoo.com/rf/020923/markets_europe_stocks_11.htmlhttp://biz.yahoo.com/rf/020923/markets_europe_stocks_11.html
Reuters Market News
Eurostocks hit by vote, close at April 1997 levels
Monday September 23, 2:40 pm ET
By William Kemble-Diaz
LONDON, Sept 23 (Reuters) - Pan-European benchmarks slumped to their lowest level in over five-years on Monday as fears of political instability in Germany reinforced economic and earnings concerns, while oil prices surged on growing war fears.
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Beleaguered French telecoms equipment group Alcatel (Paris:CGEP.PA - News) led the rout, losing 16 percent after Canada's JDS Uniphase (Toronto:JDU.TO - News) -- the world's No. 1 maker of fibre-optic components -- lowered its first-quarter sales guidance.
Insurers were also pummelled, with Germany's Munich Re (XETRA:MUVGn.DE - News) off 10.5 percent after its price target was cut by investment bank Morgan Stanley.
Some strategists said they saw a glint of light at the end of the tunnel, with Europe's stock markets down 14 percent so far this month and valuations increasingly attractive, but were loath to pile back into the market just yet.
"I'm in danger of becoming optimistic but not yet -- I'm not into catching falling knives," said Robert Kerr, pan-European equities strategist at Bank of America.
"The valuation hard nuts are cracking and on balance, the momentum of economic expectations is only marginally negative, so I don't get the impression that economies on both sides of the Atlantic are heading down the tubes."
The FTSE Eurotop 300 index (London:^FTEU3 - News) of pan-European blue chips ended down 3.4 percent at 820 points -- its weakest close since April 1997.
Falling stocks outnumbered gainers by around eight-to-one.
The narrower DJ Euro Stoxx 50 index (Zurich:^STOXX50E - News) was also down around five-year lows, diving 3.9 percent to 2,217 points.
Analysts said investors had been disheartened by the result of Sunday's elections in Germany, which returned the incumbent centre-left coalition to power with a sharply reduced majority.
With Europe's biggest economy stalled, unemployment stuck at around 10 percent, and stock markets mired in a protracted bear market, investors had hoped a conservative-liberal government would initiate structural reforms.
Trading in New York reinforced the gloomy mood, with the Dow Jones industrial average (CBOT:^DJI - News) down 1.8 percent and the Nasdaq Composite (NasdaqSC:^IXIC - News) slipping 2.7 percent to another five-year low.
INSURERS UNDER PRESSURE
The DJ Stoxx insurance index (Zurich:^SXIP - News) led the sectoral loser board, shedding 6.8 percent as investors fretted about the falling value of insurers' stock holdings and the impact that was having on their solvency ratios.
Bancassurers ING (Amsterdam:ING.AS - News) and Credit Suisse Group (CSGZn.VX), Dutch insurer Aegon (Amsterdam:AEGN.AS - News) and Britain's Prudential (London:PRU.L - News) lost between 8.0 percent and 10.8 percent.
The gloomy outlook for markets also hammered UK fund manager Amvescap (London:AVZ.L - News), which saw its shares ease 9.9 percent.
Elsewhere in financials, shares in British bank Barclays (London:BARC.L - News) fell 7.75 percent after investment bank J.P. Morgan cut its earnings forecast, blaming a tough outlook for credit quality, difficult conditions at Barclays Capital and a sluggish retail banking environment.
The oil and gas sector outperformed the rest of the market, as Brent crude oil prices surged to more than $29 a barrel due to the threat of a U.S.-led attack on Iraq.
A notable exception was Italy's Eni (Milan:ENI.MI - News) which tumbled 7.3 percent to a three-month low amid concerns that the government may sell a further stake in the oil group.
In a statement after the close, Italy's Treasury said it had discussed only the privatisation of tobacco group ETI and bank Mediocredito del Friuli Venezia Giulia at a Monday meeting.
BEIERSDORF, UNILEVER
German consumer brands company Beiersdorf (XETRA:BEIG.DE - News) provided a spot of brightness, leaping 13.4 percent on reports that its larger U.S. rival Procter & Gamble (NYSE:PG - News) was considering buying a stake in the firm.
Meanwhile, Anglo-Dutch consumer goods giant Unilever Plc/NV (Amsterdam:UNc.AS - News; London:ULVR.L - News) notched up a 2.7 percent gain after saying it was on course for mid-teens earnings growth and sales growth of its leading 400 brands of 4.5 to 5.0 percent.
But Dutch supermarkets group Ahold (Amsterdam:AHLN.AS - News) slid 12.3 percent as investors took fright at the negative publicity surrounding its dispute with key supplier Unilever, amid fears over its exposure to the U.S. retail market.
Chip-related stocks were hobbled after Deutsche Bank cut its rating on Dutch semiconductor equipment maker ASML (Amsterdam:ASML.AS - News) and lowered its revenue growth forecasts for the sector, citing its increasingly bearish stance on global chip makers.
ASML shed 11.2 percent, Dutch sector rival Philips (Amsterdam:PHG.AS - News) sank 6.9 percent, France's STMicroelectronics (Paris:STM.PA - News) lost 7.0 percent and Germany's Infineon Technologies (XETRA:IFXGn.DE - News) skidded 11.0 percent.
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