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European stocks slump
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January 4, 2000: 12:26 p.m. ET
Interest rate fears pull bourses back from records; London, Paris shed 4%
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LONDON (CNNfn) - European equities suffered their sharpest falls in six months Tuesday as interest rate fears reared up on the first full trading day of the year.
All of the major bourses plunged in morning trade and suffered more damage after a weak start on Wall Street to leave London and Paris nursing 4 percent losses and Frankfurt off 2.5 percent.
Investors piled out of equities as bond yields climbed on the prospect of higher rates on both sides of the Atlantic. Only the euro moved higher, climbing to a two-week high as the dollar weakened.
London's FTSE 100 ended 264 points, or 3.8 percent, lower at 6,665.90 on its first day of trading this year as technology, oil and financial shares suffered the sharpest sell-offs.
In Paris, the CAC 40 closed down 245 points, or 4.2 percent, at 5,672.02, just 15 points above its session low, with telecom and technology shares feeling the most pain.
Frankfurt's Xetra Dax ended off 164 points, or 2.4 percent, at 6,586.95 after losing 3 percent Monday. Zurich's SMI gave up 4 percent to close at 7,268.10.
The weak open on Wall Street rubbed salt in the wounds inflicted in Europe’s morning trading. The Dow Jones industrial average was 1.5 percent lower at the close of business in Europe.
The FTSE Eurotop 300, a pan-European index that helps gauge the regional mood, ended 4 percent lower at 1,405.85, having been down 5 percent at one point. Technology shares slid 6 percent, while telecoms lost almost 5 percent.
The euro rose to $1.0308, having peaked at $1.0345, as the dollar weakened under the pressure of rising bond yields.
Technology firms throughout Europe were hit by a 32 percent tumble in Baan shares, after the Dutch business software maker announced a restructuring and the resignation of its chief executive. It also forecast a loss of up to $250 million for the fourth quarter of 1999. The AEX index in Amsterdam slid 4.9 percent to end at 642.25.
Blue chips snag London
Decliners outnumbered gainers by four to one in London, with most blue chips losing ground. Oil producer BP Amoco (BP-A) lost 4.3 percent and Shell (SHEL) slid 4.3 percent, weakened by falling oil prices.
Mobile-phone operator Vodafone AirTouch slumped (VOD) 3.6 percent and British Telecommunications (BT-A) closed 6.4 percent lower.
Technology shares suffered the worst declines, with Misys (MSY) heading the sick list with a 10.5 percent drop, while accounting software provider Sage Group (SGE) fell 7.4 percent.
Financial stocks suffered from expectations that interest rates are set to rise. Insurer Sun Life & Provincial (SLP) closed 8.7 percent lower, HSBC Holdings (HSBA) lost 5.2 percent, Barclays (BARC) ended down 6.5 percent, and Lloyds TSB (LLOY) lost 6.3 percent despite announcing plans for a pan-European Internet banking offering.
Among the handful of gainers, Rolls-Royce (RR) climbed 6.1 percent amid reports that the aero-engine company is considering a plan to merge with U.S.-based Pratt & Whitney, a unit of United Technologies (UTX).
Retailer Marks & Spencer (MKS) gained 5.2 percent on bid talk and speculation that it may soon name a new chairman.
Outside the FTSE 100, shares of Racal Electronics (RCAL) advanced 5 percent after the company said it had received a takeover approach from French defense group Thomson-CSF (PHO).
Techs sour Paris, Frankfurt
With Thomson shares closing off 0.7 percent, the CAC 40 in Paris boasted just three gainers as it suffered the sharpest sell-off among the region’s major markets. Financial-services group CCF (PCCF) fared best with a 3.5 percent advance after Dutch financial firm ING said it was still interested in a takeover bid.
The rest of the shares in the index fell sharply, with recent gainers hit hardest. Luxury goods firm LVMH (PMC) closed down 9.5 percent while pay-TV operator Canal Plus (PAN) was 7 percent lower.
Software producer Cap Gemini (PCAP) suffered a Baan-inspired hangover to lose 7.3 percent, while France Telecom (PFTE) closed 5.3 percent lower. Retail, industrial and financial shares all lost ground, with supermarket operator Carrefour (PCA) down 6.3 percent and Crédit Lyonnais (PCL) ending down 4.6 percent.
The Baan news also slashed 3.8 percent from the price of rival SAP (FSAP) in Frankfurt. Germany’s three most heavily-traded shares all slid: Deutsche Telekom lost 3.5 percent, DaimlerChrysler (FDCX) dropped 1.1 percent, and Deutsche Bank (FDBK) ended 1.1 percent lower despite announcing plans to restructure its retail operation.
Retailer Karsdat Quelle (FKAR) lost 5.7 percent and Mannesmann (FMMN) fell 3.1 percent.
Swatch was the worst performer in Zurich, losing more than 7 percent 
--from staff and wire reports
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