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Europe ends lower
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January 16, 2001: 12:41 p.m. ET
Telecom shares hit by IPO plans; tech, retail stocks sink into the red
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LONDON (CNNfn) - European markets ended lower Tuesday as plans for telecom IPOs steered investors away from the sector while tech and retail shares languished.
London's FTSE 100 dropped 1.4 percent to 6,083.3, led by retailer Kingfisher (KGF) and COLT Telecom Group (CTM) .
 In Paris, the CAC 40 blue-chip index lost 1.2 percent to 5,761.67, led by electronic component maker Schneider Electric (PSU) and broadcaster TF1 (PTFI).
Frankfurt's electronically traded Xetra Dax declined 0.3 percent to 6,500.45 in late trade. Travel company Preussag (FPRS) and chemicals firm Degussa Huels (FDHA) were the top losers on the benchmark index.
In Amsterdam, the AEX index slipped 1.5 percent and the SMI in Zurich was up 0.2 percent, thanks to gains in Nestlé, while the MIB30 in Milan declined 1 percent.
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The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, slipped 1.4 percent, with its telecom sector down more than 3 percent and its information technology component 4.4 percent lower.
In the currency market, the euro eased to 93.84 U.S. cents from 95.20 in late trading Monday.
Markets in the U.S. were mixed in midday trade, with the blue-chip Dow Jones industrial average edging up 0.3 percent while the technology-heavy Nasdaq composite index shed 1.2 percent.
Lower gasoline prices and mortgage interest payments nudged U.K. inflation lower in December, keeping it below the Bank of England's target for a 21st consecutive month.
Underlying inflation, which excludes volatile home loan payments, rose 2.0 percent in the year to December, down from 2.2 percent in November.
The inflation figures were a little better than expected, but weren't likely to have huge implications for interest rates in the first half of this year, Gwyn Hacche, senior European economist at HSBC, told CNNfn.com.
"We'd expect to see interest rates coming down in the second half of the year by 50 basis points," he said.
Telecom shares were lower ahead of multiple initial public offering plans that could saturate investors' taste for the sector.
 Britain's dominant fixed-line phone company, British Telecommunications (BT-A), said Tuesday it is in talks to mount an initial public offering of shares in Spain's second largest mobile operator Airtel. Vodafone Group (VOD), the Spanish operator's majority shareholder, fell 3.7 percent. BT, which owns 17.8 percent of Airtel, dropped 0.4 percent.
France Telecom (PFTE), which plans to float its Orange mobile phone unit, fell 2.8 percent, while Deutsche Telekom (FDTE) dipped 1.6 percent in Frankfurt. Telekom plans an offering of its shares in T-Mobil later this year.
COLT Telecom Group [LSE:CTM] lost 8.8 percent.
Dutch phone company KPN Telecom fell for a second session, sliding 3.3 percent after Standard & Poor's on cut the firm's credit rating, as expected, to triple B from A minus. KPN said the rating cut will cost it an additional  15 million in interest payments annually.
Telecom equipment makers followed the lead of the operators. Nokia, the world's biggest mobile phone handset maker, slipped 5.3 percent in Helsinki, network supplier Ericsson lost 5.3 percent in Stockholm, while Alcatel (PCGE) dropped 1.5 percent in Paris and British rival Marconi (MNI) slumped 5.3 percent.
Technology stocks were generally weaker. Chip designer ARM Holdings (ARM) slid 7.5 percent and Franco-Italian chipmaker STMicroelectronics (PSTM) shed 3.1 percent.
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German electronic component maker Epcos (FEPC) dropped 2.2 percent and parent Siemens (FSIE) declined 1.6 percent.
 Electrical equipment maker Schneider (PSU) tumbled 11.8 percent when trading resumed following its 6.7 billion merger with domestic rival Legrand (PLR) Monday. Legrand rose 2.3 percent. Both stocks were suspended for Monday's session.
Among media stocks, French broadcaster TF1 (PTFI) shed 4.1 percent while British rival British Sky Broadcasting (BSY) fell 3.5 percent.
European oil stocks retreated from their strong gains in the previous session. Investors stepped back Tuesday despite continued expectations the Organization of Petroleum Exporting Countries would slash production quotas at Wednesday's meeting in Vienna.
BP (BP) fell 2.4 percent and Shell Transport & Trading (SHEL) dropped 2.6 percent in London, while TotalFina Elf declined 2.5 percent in Paris.
Retailers had a mixed day. Shares in Britain's biggest retailer, Kingfisher (KGF), plunged 9.8 percent. The retailer revealed better-than-expected Christmas sale figures, but growth in France was from lower-margin operations. The update also showed that growth came from low-profit goods and that costs were rising.
British supermarket chain Safeway (SFW) jumped 2.3 percent. The U.K.'s fourth-largest food retailer said third-quarter trading grew 5.9 percent in stores open for more than 1 year.
Drug store operator Boots (BOOT) rose 0.7percent. The British company reported a drop in overall like-for-like retail sales in the quarter though December as it moved away from its non-core leisure ranges. Core health and beauty revenues sales rose 2.1 percent on a same-store basis.
Carrefour (PCA), the world's second largest retailer, fell 0.8 percent in Paris, while Germany's Karstadt Quelle (FKAR) rose 5 percent in Frankfurt.
French luxury goods company LVMH Moet Hennessy Louis Vuitton (PMC) rose 0.9 percent. The company said its setting up a retail joint venture with world diamond titan De Beers to sell gems under the South African miner's brand name.
Swiss food conglomerate Nestlé rose 0.7 percent after agreeing to buy U.S. pet food maker Ralston Purina (RAL: Research, Estimates) in a $10.3 billion deal.
German travel company Preussag (FPRS) slid 3.2 percent and chemicals firm Degussa Huels (FDHA) lost 3 percent.
-- from staff and wire reports 
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