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European markets slide
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July 6, 2001: 1:21 p.m. ET
Technology, telecom, media stocks decline; chips issue more warnings
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NEW YORK (CNNfn) - European markets fell sharply Friday, with London's FTSE 100 closing at a new 13-week low and techs taking another hammering after more profit warnings on both sides of the Atlantic.
After the U.S. market closed Thursday, chip maker Advanced Micro (AMD: Research, Estimates) warned second-quarter profits will fall short of Wall Street's expectations, after an unexpected drop in sales.
That was enough to rip through European chip and related stocks. ARM Holdings (ARM), Europe's biggest chip designer, dived 4.8 percent in London, after being down more than 12 percent.
Europe's biggest chipmaker, ST Microelectronics (PSTM), lost 5.6 percent, and No. 3 Philips Electronics dropped 4.3 percent.
ARC International (ARK), another UK chip designer, plunged 22.8 percent, after saying turnover and profits were being affected by delays in license agreements.
"The trend will continue until we come through the second-quarter (earnings) season and then we can see how bad it is, but investors are not coming back to those (tech) sectors," Peter Oppenheimer, economist at HSBC, told CNN.
Investors will "look for some kind of recovery next year and we may see a small bounce after the second-quarter season led by the battered tech sector," Oppenheimer added.
London's FTSE 100 fell 70.4 points, or 1.27 percent, to 5,479.2 – its lowest close since April 3 -- as telecom equipment maker Marconi (MONI) extended the previous session's loss of 54 percent, sliding another 7.6 percent.
Marconi rattled global markets after saying slowing demand for its telecom equipment could cut this year's profit in half.
Among the region's biggest telecom equipment makers, the world's biggest maker of mobile phones, Nokia, fell 2 percent in Helsinki. Alcatel, Europe's fourth-biggest telecom equipment maker, lost 5.8 percent in Paris, Germany's Siemens dipped 6 percent and Ericsson, the world's biggest supplier of mobile phone equipment, declined 4.3 percent in Oslo.
In Paris, the CAC 40 blue chip index fell below 5,000 for the first time since late March, with banks, tech stocks and retailers all pulling the index down.
The CAC 40 dropped 124.47 points, or 2.4 percent, to 4,999.36, with software company Dassault Systemes (PDSY) sliding 1.4 percent, after U.S. software maker BMC (BMC: Research, Estimates) repeated a familiar calling, saying it will miss profit targets.
Other European software companies also fell. Logica (LOG) lost 1.8 percent, Misys (MSY) dipped 6.8 percent and CMG (CMG) declined 4.3 percent.
Frankfurt's electronically traded Xetra Dax fell 134.12 points, or 2.24 percent, to 5,865.07. Europe's biggest software company, SAP (FSAP), dipped 6.7 percent and electronics component maker Epcos (FEPC) dropped 5.5 percent.
In Amsterdam, the AEX index slid 1.9 percent and the SMI in Zurich was 1 percent lower. Milan's MIB30 index dipped 1.7 percent.
The banking sector added to the gloom after France's second-biggest bank, Societe Generale (PGLE), warned a slowdown in investment banking activities will leave it short of its return-on-equity targets in the second quarter. SocGen fell 4.5 percent.
Chief Financial Officer Herve Saint-Sauveur said in an interview with French financial daily L'Agefi: "We cannot work miracles and of course we felt a contraction in transaction volumes in the U.S. and Europe."
Losses in banking stocks also took their toll on European indices.
Lloyds-TSB (LLOY) dropped 2.6 percent, the Bank of Scotland (BSCT) dipped 2.5 percent, Barclays (BARC) slipped 3 percent and the Halifax (HFX) lost 3.2 percent in London.
BNP Paribas (PBNP), France's biggest bank, declined 3.4 percent and Deutsche Bank, Europe's biggest, fell 3.1 percent.
In midday trading in the U.S. Friday. the Nasdaq fell 62.64 points, or 3 percent, to 2,017.47 and the Dow Jones industrial average dropped 212.28, or 2 percent, to 10,267.58.
In the currency market, the euro edged higher against the U.S. dollar to 84.57 U.S. cents from 83.62 in late New York trading Thursday.
The euro fell to an eight-month low of 83.50 in the previous session after the European Central Bank left interest rates on hold at 4.5 percent and Wim Duisenberg, the president of the euro zone central bank, said it is unlikely to cut rate "for some times to come."
Duisenberg added the no-change policy would remain in place until inflation in the 12 nations that form the euro zone falls below the target of 2 percent. 
-- from staff and wire reports
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