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Europe heads downhill
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October 28, 1998: 9:59 a.m. ET
Weak dollar, Tokyo fall and earnings news depress markets
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LONDON (CNNfn) - European stocks beat a retreat after Tuesday's gains, with all the major bourses stuck in reverse by early afternoon Wednesday.
For a change, interest rates did not dominate the market. The weakening dollar, some bad corporate news and losses elsewhere all weighed heavily on traders' minds.
The dollar was down to 1.65 marks on fears of a currency devaluation in Brazil, dragging export-dependent companies with it.
A two percent dive in Tokyo overnight on the back of Tuesday's fall on Wall Street compounded the problem. Lower than expected earnings reports from a number of companies were the icing on an unappetizing cake.
London's FTSE 100 was off 1.16 percent at 5,269.4, with Frankfurt's Xetra DAX the hardest hit, down 2.78 percent down at 4,552.31.
The CAC 40 in Paris slid 2 percent to 3,479.83 while Zurich's SMI was off 1.51 percent at 6,352.2.
In Frankfurt Deutsche Telekom stumbled to 44.71 marks, down 1.34 marks, despite announcing a substantial gain in third-quarter net profits. HypoVereinsbank was off 8 marks at 125 after announcing a 3.5 billion mark risk provision.
In Paris, insurance company Axa - which was off nearly five percent at 600 francs - France Telecom and oil company Elf Aquitaine all dragged the market down.
Rhodia, the specialty chemicals unit of Rhone-Poulenc, was also heading lower after Goldman Sachs cut its earnings forecast for the company following Rhodia's nine-month report.
In London falls were curbed by expectations of an interest rate cut next week. But retailers and leisure businesses were hurt on poor earnings reports and fears that these industries would be hit first in a recession.
Half-year results from supermarket operator J. Sainsbury and brewer Whitbread highlighted a slowdown in consumer spending. Stocks in both groups dropped - Sainsbury was down 7.42 percent to 519p -- and dragged down rivals ASDA, Kingfisher, Safeway and Tesco.
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