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European markets retreat
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February 7, 2000: 12:50 p.m. ET
Weak telecom and financial shares peg back bourses; euro drops against dollar
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LONDON (CNNfn) - Europe's major stock markets all lost ground Monday as a weak open on Wall Street intensified selling pressure on key telecom and financial shares.
Frankfurt fell 2 percent from its record close Friday while Paris slipped 1 percent. London's blue-chip index lost more than 1 percent ahead of an expected Bank of England interest-rate increase later this week.
London's benchmark FTSE 100 closed down 66 points at 6,118.60, its lowest since Oct. 27, as utility and cyclical stocks suffering the sharpest falls. The FTSE shed 60 points in the last hour of trading, tracking declines early in the U.S. trading session that left the Dow Jones industrial average off 0.5 percent at the close of business in Europe.
The Xetra Dax index in Frankfurt lost 148 points to close at 7,296.32 as financial stocks lost ground. In Paris, the CAC 40 ended 72 points lower at 6,203.58, giving up gains made in morning trading.
Smaller markets also fell. The SMI index in Zurich lost 0.24 percent, the AEX in Amsterdam shed 1.3 percent and the Mib-30 in Milan dipped 1.2 percent.
The FTSE Eurotop 300, a broader index of the largest European stocks, ended 0.7 percent lower at 1,539.11, with its telecom segment losing 2.2 percent and chemical shares off 1.7 percent. The mining sub-index advanced 2.4 percent, lifted by a surge in gold prices. Technology stocks rose 1 percent.
European bond prices fell, pushing up the yield on the 10-year Bund by 3 basis points to 5.54 percent.
The euro weakened, losing almost 1 percent from its Friday close to reach $0.9764. The dollar continued to gain ground after strong U.S. economic data last week.
Energy shares were the biggest decliners amid uncertainty over the regulatory regime. British Energy (BGY) challenged a ruling by the industry watchdog that would widen the scope of the regulatory body's powers. Scottish Power (SPX) was worst hit as its shares fell almost 9 percent. Powergen (PWG) fell 7 percent and National Power (NPR) lost 4.6 percent.
Vodafone AirTouch (VOD) lost 3.3 percent, giving up some of the gains the stock made before its victory Thursday in the takeover tussle for Germany's Mannesmann.
Investors continued to sell other blue-chip shares to make way for the expected increase in Vodafone's weighting in the FTSE 100 index, probably rising to about 15 percent. Glaxo Wellcome (GLXO) lost 2 percent while its merger partner SmithKline Beecham (SB-) fell 4.7 percent.
Retail stocks also suffered selling pressure ahead of the interest-rate announcement. Supermarket chain J Sainsbury (SBRY) ended down 7.3 percent, Kingfisher (KGF) lost 6 percent and Dixons (DXNS) closed 5.5 percent lower.
Steel maker Corus (CS) was the FTSE's worst performer, ending 10.2 percent lower. The company suffered as number of analysts cut their earnings estimates or credit ratings.
British Airways (BAY) lost 3.2 percent as increasing oil prices overshadowed last week's announcement of a smaller-than-expected third-quarter pretax loss.
While London's heavyweights fell, the technology sector provided the four leading FTSE gainers. Computer-services firm Misys (MSY) jumped 14 percent while rival CMG (CMG) climbed 9.7 percent, after earlier rising almost 25 percent. Sema Group (SEM) added almost 9 percent.
Mining groups also appreciated as gold prices climbed to a four-month high. Anglo American (AAL) rose 2.6 percent.
Financial and telecom shares declined in Frankfurt. Deutsche Telekom (FDTE) slumped 6.2 percent, paring last week's double-digit gains, after a report that it may have to delay the sale of its cable assets. Mannesmann (FMMN) lost 4.2 percent.
Commerzbank (FCBK) shed 2.4 percent ahead of its 1999 earnings report, due after the market close, and Dresdner Bank (FDRB) lost 2.2 percent.
Adidas-Salomon (FADS) was the Dax's biggest gainer, with a 10.1 percent advance after the sportswear firm posted an 11 percent increase in 1999 profit. Retailer Metro (FMEO) rose 5 percent, after its chief executive said the stock was undervalued.
In Paris, France Telecom (PFTE) suffered a 6.1 percent decline, hit by expectations that it will face fierce competition to acquire British mobile operator Orange, which Vodafone must spin off following its agreement to merge with Mannesmann.
Retailer Pinault-Printemps Redoute (PPR) fell 5.2 percent after analysts at Morgan Stanley Dean Witter cut their earnings forecast.
Telecom equipment maker Alcatel (PCGE) was the market's best performer, adding 3.5 percent following a strong earnings report last week. Utility and communications conglomerate Vivendi (PEX) gained 2.1 percent. Vivendi chairman Jean-Marie Messier said Sunday the Vodafone-Mannesmann merger will enhance his company's venture with Vodafone to develop Internet portals.
Thomson-CSF (PHO) rose 2 percent. The defense electronics firm last week delivered a strong earnings report for 1999.
In Zurich, Swiss-Swedish engineering group ABB lost 5 percent, paring gains it made last week after its annual earnings report. Swisscom steadied the market with a 3 percent advance.
Amsterdam was hit by a 2 percent fall in telecom operator Royal KPN while electronics giant Philips fell 2.4 percent.
Telecom Italia shares lost 4 percent in Milan. 
--from staff and wire reports
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