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European markets slide
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October 21, 1999: 12:40 p.m. ET
London, Frankfurt dip 1% on negative corporate news, Wall St. tumble
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LONDON (CNNfn) - European stock markets were knocked down Thursday by the one-two punch of negative corporate news and Wall Street's early slide. London and Frankfurt both were down 1 percent, though Paris eked out a narrow advance.
The major bourses spent most of the session in the red despite the European Central Bank's decision to leave its key interest rate unchanged at 2.5 percent. However, the bank is still widely expected to hike rates when it meets again Nov. 4.
A $36 billion European telecom deal failed to deflect attention from the selling pressure on technology stocks after IBM's (IBM) profit warning sent U.S. markets tumbling.
London's FTSE 100 fell as low as 5,888.10 before recovering in late afternoon to close down 67.4 points, or 1.12 percent, at 5,939.30. Market volume was heavy with almost 1.3 billion shares changing hands.
In Frankfurt, the Xetra Dax closed 50 points shy of its session high at 5,246.49, a loss of 44.7 points, or 0.85 percent. Zurich's SMI ended down 1.1 percent lower at 6,783.
The CAC 40 in Paris fell into the red after the U.S. market open but bounced back as more positive corporate news helped lift some of its heavyweight constituents. The index ended up 24.6 points at 4,602.39.
The Dow Jones industrial average was down 1.4 percent at the close of Europe's trading session.
The FTSE Eurotop 300, a pan-European gauge of the wider market mood, ended 0.6 percent lower. Tobacco stocks slumped 5 percent after a legal setback for the industry in a U.S. court.
Computer shares weakened 5 percent following IBM's (IBM) warning Wednesday, though information technology shares gained almost 2 percent. Telecom and oil and gas shares both firmed 2 percent.
The euro firmed by almost 0.25 cent following the ECB decision to reach $1.0803 at the end of European trading.
Telecoms helped limit the weakness in European markets after Germany's Mannesmann (FMMW) revealed a $36 billion bid for Britain's third-largest mobile company, Orange (ORA), sparking hopes for more juicy deals across the industry.
Orange shares jumped more than 7 percent at one point in London trade before ending the day 4.6 percent ahead at 1,462 pence. Mannesmann ended just off its session low after losing 8.2 percent in Frankfurt on fears that it is paying too much to access the U.K. market..
The proposed deal lifted other telecom stocks, which filled the top five spots among the FTSE gainers. Vodafone AirTouch vaulted at the very end of the trading day to lead the FTSE with a 6 percent rise amid speculation it may seek to top Mannesmann's offer.
British Telecommunications [LSE:BT.A] ended 3.4 percent higher despite being warned by the U.K. telecom regulator over its service. Colt Telecom (CTM) was 3.1 percent ahead and network provider Energis (EGS) added 3 percent.
The sector belied the weakness across the board in London, though oil heavyweight BP Amoco [LSE:BP.A] climbed 2.5 percent to limit the overall damage.
Media group Reuters (RTR) was the largest decliner, slumping 13.6 percent after disappointing third-quarter results. The company issued a profit warning last month.
Drug maker SmithKline Beecham (SB) crashed 11.5 percent after European regulators failed to approve its diabetes drug Avandia. The news overshadowed the release of its third-quarter earnings, which rose 10 percent.
British American Tobacco (BATS) plunged 10.9 percent after a Florida court issued a ruling that could cost the tobacco industry billions of dollars.
Financial stocks also weakened, with Legal & General (LGEN) worst hit as it lost 6.6 percent while Abbey National (ANL) was off 3.7 percent.
Software supplier Misys [(MSY) joined the IBM casualty list with a 6.9 percent drop while Sema (SEM) and Sage Group (SGE), two software providers, fell 3.9 and 5.6 percent respectively.
Continental bourses end mixed
IBM's woes also weighed on Frankfurt, where business software group SAP [FSE:FSAP£] closed down 5 percent.
Utility RWE (FRWE) was the leading Dax stock as it added 1.3 percent amid reports that it may launch a $21 billion bid for rival VEW.
BMW (FBMW) lost all of its recent gains with a 2.4 percent decline while DaimlerChrysler (FDCX) dipped 0.7 percent.
Financial stocks ended mostly flat while index heavyweight Deutsche Telekom (FDTE) rose 0.4 percent.
Vivendi (PEX) was the best performer on the CAC, rising 4.7 percent, as bidders circled its SFR cellular unit.
Carrefour (PCA) rose 3.6 percent after the retail group announced that it had secured more than 95 percent of the stock of takeover target Promodes, paving the way for the creation of the world's largest retailer.
Food company Danone (PBN) rose 3.5 percent after posting better-than-expected third-quarter results and market-pleasing nine-month sales figures.
Auto parts maker Valeo (PFR) jumped 2.9 percent after Japan's Unisia Jecs said the companies had agreed to explore joint venture plans.
Software consultant Cap Gemini (PCAP) posted the largest decline, losing 3.8 percent. France Telecom (PFTE) fell 2.7 percent amid reports that the company plans to bid for one of five next-generation mobile phone licenses to be auctioned by the British government.
Supermarket chain Casino (PCO) ended off 3 percent as the volatile stock continued a roller coaster ride fueled by takeover speculation.
Nokia, the world's largest mobile phone manufacturer, climbed almost 2 percent in Helsinki after posting a 36 percent rise in third-quarter profits.
Dutch business software maker Baan plunged 14 percent in Amsterdam after reporting a larger-than-expected third-quarter loss amid a sharp decline in new software sales.
Swiss shares were almost uniformly weaker, with employment services group Adecco suffering the worst decline as its shares slid 2.2 percent. Engineering firm ABB lost 2 percent and Novartis dipped 1.5 percent. 
-- from staff and wire reports
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