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Bourses tumble in early trade
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January 13, 1999: 5:41 a.m. ET
Banks hurt by fears over loans to China, Brazil concerns weigh
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LONDON (CNNfn) - Wall Street's sell-off Tuesday crossed the Atlantic Wednesday, to send European bourses sharply lower in early trade.
Fears of economic difficulties in Brazil and growing concerns over banks' exposure to collapsed Chinese investment group GITIC prompted the wave of selling. The main markets were all in negative territory, some by more than 3 percent. Spain's IBEX index lost more than 4 percent, due to its heavy exposure to Latin America.
In Frankfurt the Xetra Dax slid more than 3 percent, 158 points, to 5,037.64. In London the FTSE 100 dropped 2 percent, 132 points to 5,901.9.
In Paris the CAC 40 lost 3.5 percent, 145 points, to 3,955.90, while Zurich's SMI slipped 3 percent to 7,208.4.
Among U.K. stocks, electrical retailer Dixons (DXNS) dipped 1 percent to 901 pence as investors locked in some profits after the stock's storming rise over the past 12 months. Half-year earnings came in as expected, with a 5 percent increase in underlying profits to 81 million pounds ($133 million).
Drinks groups and pub operators remain under a cloud, following a profit warning from Allied Domecq (ALLD) Tuesday. Allied shares fell a further 2 percent after a sharp fall Tuesday, and Diageo (DGE) slipped 2 percent to 680 pence. A sales update from sector heavyweight Whitbread (WTB) later Wednesday will be keenly awaited.
Among second-tier stocks Whittard of Chelsea (WOC), a tea and coffee retailer, warned that full-year earnings would be below expectations, slicing 20 percent off its market value.
U.K. banks were spared the inquisition regarding their loans to GITIC, but in Frankfurt investors continued to shun the sector, following a weak day Tuesday.
The German banks have denied making significant loans to GITIC, but shares were also pressured by worries over exposure to Brazilian debt. Deutsche Bank (FDBK) slumped 5 percent to 51.39 euros, and Dresdner Bank (FDRB) slipped 4 percent to 39.75 euros.
The only real bright spot in Frankfurt was chemicals group BASF (FBAS), which announced a 5 percent share buy back, helping its shares move higher.
Paris investors focused on Société Générale (PGLE), sending the bank's shares down almost 5 percent to 146 euros. The bank said Tuesday that its exposure to GITIC was only $25 million, but again, Brazil worries weighed on prices..
LVMH (PMC) slid almost 4 percent to 199 euros.
Car parts supplier Valéo (PFR) continued its recent rise, however, gaining 5 percent to 70.5 euros.
Unsurprisingly, the Swiss banks were caught in the general gloom affecting the sector. UBS dipped 4 percent to 441 francs, and CS Group tumbled 5 percent to 220 francs.
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