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Techs drive Europe down
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August 23, 2000: 1:15 p.m. ET
Hardware makers fall, telecoms still under pressure, but oils spurt as crude rallies
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LONDON (CNNfn) - Renewed weakness for Europe's "new economy" technology, media and telecom sectors pulled bourses to a lower close Wednesday, while gains for oil stocks due to rising crude oil prices kept the losses limited.
London's benchmark FTSE 100 index closed down 18.6 points, or 0.3 percent, to 6,566.2. Chip designer ARM Holdings (ARM) led the list of decliners with a 6.9 percent drop.
In Paris, the blue-chip CAC 40 ended down 12.01 points, or 0.2 percent, to 6,501.70, with defense company EADS (PEAD) falling 6.1 percent and defense electronics maker Thomson-CSF (PHO) down 3.3 percent.
Frankfurt's Xetra Dax fell 16.42 points, or 0.23 percent to 7,232.78. 
Italy's MIB 30 benchmark index rose 0.5 percent, as strong bank stocks offset weakness in telecom sector shares ahead of Thursday's start of the auction of next-generation cell phone licenses in Italy. Amsterdam's AEX fell 0.1 percent, but the SMI in Zurich climbed 0.7 percent as chocolate and food titan Nestlé rose 4.4 percent after saying its first-half net jumped 35 percent.
The pan-European FTSE Eurotop 300, a broad index of the region's largest stocks, declined 0.1 percent, with its information technology sector down 2.1 percent due largely to ARM's decline. Its telecom component fell 1.1 percent amid concern about the high cost of buying European third-generation mobile phone licenses. Italy's "3G" auction starts Thursday.
One market watcher said it's still to early to buy on the dips in the technology, media and telecommunications sectors.
"I think the [new economy sector] has still got further to go down - there are concerns about interest rates and the high cost of the next-generation mobile phone licenses," Sharon Coombs, a European economist at HSBC Securities in London, told CNNfn.com. "We're still backing defensives and financials."
As Europe's bourses closed, the Dow Jones industrial average was virtually unchanged, while the Nasdaq composite index reversed an early loss, rising 0.35 percent.
'European rate rise needed'
In the currency market, the euro nosed up to 89.76 U.S. cents from 89.64 cents in New York late Tuesday. But one analyst said the common currency still faces downward pressures.
"We believe the euro could slide to 85 cents and things could get a lot worse, with the Danish referendum going against joining the euro," Steve Barrow, an economist at Bear Stearns, told CNNfn, referring to a Denmark vote in September about whether to join the 11-nation euro zone. 
"We are recommending clients to accelerate exposure to the dollar. The U.S. economy is in a good state and a soft landing is widely expected," he added.
"The ECB needs to raise interest rates to stop a big slide in the euro," Barrow said. "We doubt the German economy will slow down as is predicted."
Telecom stocks continued to be weak, but France Telecom (FTE) stemmed its recent losses, adding 1.3 percent. Rival Deutsche Telekom (FDTE) was little changed.
But Vodafone AirTouch (VOD), the world's biggest mobile-phone company, lost 2.9 percent, Dutch telecom operator Royal KPN shed 2.8 percent, and Sonera dropped 2.8 percent in Helsinki after a report said the Finnish mobile-phone company plans to take part in the Italian auction with Spain's Telefónica and others. Telefonica fell 3.9 percent in Madrid.
After losing ground early in the session, Telecom Italia closed up 0.4 percent and its mobile phone affiliate TIM rose more than 1 percent. Bear Stearns said it expects each of the five Italian licenses on offer to cost about  5 billion ($4.45 billion). As well as paying for licenses, mobile companies will also have to fork out for the cost of developing advanced cellular networks.
In the hardware sector, Finnish mobile phone maker Nokia dropped 3.2 percent, Swedish rival Ericcson shed 2.1 percent while France's Alcatel (PCGE) slipped 1.5 percent in Paris. Siemens (FSIE) of Germany shed 0.9 percent. 
Among chip companies, STMicroelectronics (PSTM) slipped 1.9 percent in Paris and Germany's Infineon Technologies (FIFX) also lost 4.4 percent.
German chemicals stocks turned mixed in late trading. Degussa Huels (FDHA) up 2.6 percent and Bayer (FBAY) climbed 0.7 percent, while Schering (FSCH) dropped 3.5 percent.
Thomson Multimedia (PTTM), a consumer electronics company, slipped 4.2 percent in its debut on the CAC 40 index.
Leading the gainers in Frankfurt was Deutsche Bank (FDBK), up 3.6 percent. The bank's equity research unit advised its clients to take profits on rival Dresdner Bank (FDRB), which slipped 3.2 percent. The companies pulled out of a merger plan last year.
Automaker Volkswagen (FVOW) climbed 3.4 percent.
Spillover from higher oil prices
On the International Petroleum Exchange in London, Brent crude oil jumped 99 cents to $30.92 a barrel following a U.S. report late Tuesday that showed dwindling oil reserves there.
Buoyed by rising oil prices, shares of France's TotalFinaElf (PTFT) rose 2 percent and in London, Shell Transport and Trading (SHEL) also gained 2 percent, and BP Amoco (BPA) rose 1.2 percent. Italian gas company ENI rose 3.8 percent in Milan. 
But on the downside, analysts blamed concern about fuel prices for a 3.4 percent drop for airline Deutsche Lufthansa (FLHA) in Frankfurt, even though the German carrier said Wednesday its first-half profit rose 18 percent on rising passenger numbers. British Airways (BAY), the only European airline larger than Lufthansa, plunged 5.1 percent.
Mining company Billiton (BLT) led gainers in London, jumping 7.1 percent, followed by hospitality company Hilton Group (HG-), up 4.9 percent ahead of the release of its first-half profit report, which is expected to be released Thursday.
Food retailer J. Sainsbury (SBRY) rallied 4.9 percent. The Financial Times reported that Britain's No. 2 grocery chain might raise more than £1 billion ($1.5 billion) from the sale of Homebase, its home-improvement store chain. Other U.K. retailers also rose, with Boots (BOOT) up 3.9 percent and Marks & Spencer (MKS) adding 4.2 percent. 
-- from staff and wire reports
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