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Bourses take triple hit
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September 21, 1999: 1:12 p.m. ET
London at 7-month low as rate fears, yen strength, U.S. trade data take toll
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LONDON (CNNfn) - European markets closed firmly in the red Tuesday, after a larger-than-expected U.S. trade deficit further deepened the gloom caused by fears of higher interest rates and a strong yen.
London posted the biggest losses, with the FTSE 100 touching a 7-month low. The blue-chip index fell 99 points, or 1.6 percent, to 5,957.3, piercing the psychological 6,000 barrier for the first time in five weeks.
The CAC 40 in Paris was not far behind; French blue chips shed 68 points, or 1.4 percent, to end at 4,612.93, returning to levels of earlier this month.
The Xetra Dax in Frankfurt lost 69 points, or 1.3 percent, to finish at 5,282.76, after a stronger-than-expected business confidence survey raised the specter of higher euro-zone interest rates.
The SMI in Zurich, which had bucked the losing trend for most of the session, finished with a 29-point dip to 7,043.0, a fall of 0.4 percent.
Bourses were already in a downbeat mood for most of the session, undermined by fears of higher euro-zone interest rates, and the effect of a stronger yen on the recovery of the Japanese economy.
The yen strengthened against the dollar and the euro following the Bank of Japan's decision to hold back from intervention following its policy meeting Tuesday. The yen stood around 104.77 to the dollar, while against the euro it traded around the 109.60 mark.
The dollar was relatively flat against the euro at 1.0462.
Tuesday morning's sharp downturn on Wall Street further deepened the gloom for European stocks, following the release of record U.S. trade deficit numbers for July. The $25.2 billion imbalance surprised the markets and sent U.S. bonds tumbling.
The FTSE Eurotop 300, a broader measure of the largest pan-European stocks, reflected the negative session across the continent as it lost 1.3 percent to close at 1,295.64. Only the information technology sector managed to post any gains, as leisure, steel and oil stocks led the slide.
Indeed, the leading oil stocks were some of the biggest losers in Europe, despite a boost in oil prices. Benchmark Brent crude traded some 10 cents higher in late European trading at $22.76 a barrel, after slipping earlier in the session.
But investors dumped oil shares as doubts mount about the sustainability of higher oil prices ahead of an OPEC meeting in Vienna Wednesday.
BP Amoco [LSE:BP-A] pared some of its earlier losses, but closed down 1.7 percent in London; rival Shell (SHEL) slumped 3.6 percent. In Paris, TotalFina (PFP) fell 3.6 percent, while Elf Aquitaine (PAQ) closed almost 4 percent lower.
Rate-sensitive financial stocks were the biggest losers in London, wiping some 20 points off the index. Insurer Sun Life & Provincial (SLP) was the biggest decliner on the FTSE as it tumbled 7.7 percent, while its larger rival Prudential (PRU) shed 4.8 percent.
Banking leader Lloyds TSB (LLOY) fell 3.1 percent, while one of its counterparts in the telecom sector, British Telecommunications (BT.A), fell 4.5 percent.
One major issue to buck the trend was Vodafone AirTouch, after the world's largest cellular phone operator confirmed its link-up with Bell Atlantic (BEL) of the U.S. The shares ended 1 percent higher.
The biggest gainer in London was the technology company GEC (GEC), which gained 2.6 percent, with beverage producer Allied Domecq (ALLD) up 2.3 percent.
Tesco (TSCO), Britain's largest supermarket chain, also bucked the trend to close 1.2 percent higher after posting an 8 percent rise in first-half profits to 401 million pounds ($645 million).
Frankfurt fell amid interest rate worries after an upbeat report on business confidence from the influential Ifo research institute. The index reached a 12-month high of 95.3 in August from 93.7 in July.
Chemical stocks led the way down. BASF (FBAS) slid 2.8 percent, while specialty chemical producer Degussa Huels (FDGS) tumbled 4.6 percent.
Deutsche Telekom (FDTE) slipped 2.2 percent.
Veba (FVEB) fell 1.4 percent, ahead of an anticipated announcement on its planned merger with fellow utility Viag (FVIA) at the weekend. Viag lost 3.4 percent.
In Paris, conglomerate Lagardère (PMMB) was the biggest loser, slumping almost 6 percent amid reports that defense contractor Aerospatiale Matra, in which it holds a 33 percent stake, would post a substantial first-half loss Wednesday.
BNP (PBNP) lost 2.5 percent after outlining a new strategic focus that includes closer ties with Germany's Dresdner Bank (FDRB), though it stops short of a full merger. Dresdner was just over one-half percent lower in Frankfurt.
In Zurich, drug maker Novartis bucked the trend with gains of 2.2 percent. The telecom company Swisscom led the retreaters, as its stock tumbled 3.1 percent.
-- from staff and wire reports
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