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Europe posts sharp drops
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February 28, 2000: 1:02 p.m. ET
Telecoms, cyclicals dumped as euro slump rattles nerves; Frankfurt off 2%
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LONDON (CNNfn) - European equity markets ended sharply lower after a volatile session Monday as investors exited growth stocks to leave the blue-chip index in Frankfurt down 2 percent while London and Paris lost 1.5 percent, weakened by the euro's slide to an all-time low below $0.94.
While U.S. markets rallied after the Dow's 2 percent slump Friday, the hangover from Wall Street and the single currency's slump unnerved investors, distracting attention from a continuation of a solid earnings season that had buoyed bourses last week. Bourses quickly lost early gains and gyrated in a broad trading band throughout the day.
In London, the benchmark FTSE 100 index closed down 98 points, or 1.58 percent, at 6,100, above a session low of 6,054. Energy and media shares fell, outweighing advances by financial stocks, which have lagged the index over the past three months.
The electronically traded Xetra Dax in Frankfurt shed 152 points to close at 7,587.13, with cyclical stocks the weakest performers. Deutsche Borse, the Dax's owner, also announced that it will extend trading hours beginning June 2. Media and telecom shares fell, leaving the CAC 40 in Paris down 86 points at 6,102.73.
Smaller markets also suffered. In Amsterdam, the AEX was down 1.2 percent and the Mib-30 index in Milan closed 1.1 percent lower after hitting a record high in earlier trade, and the SMI in Zurich closed down 1 percent.
A bright start on Wall Street helped lift European markets off their session lows, with the Dow Jones industrial average up 1.55 percent at the close of business in Europe.
The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, ended 1 percent lower at 1,559.29, weakened by a 3 percent slump in its utility sub-index while media and telecom stocks were 2 percent lower.
The euro hit its nadir in Asian trade Monday before regaining much of its loss by the end of the European session. It was weakened by remarks from Bundesbank President Ernst Welteke that appeared to rule out a rise in euro-zone interest rates at Thursday's European Central Bank meeting.
 Markets also were unnerved by a series of country reports from the European Commission, the executive arm of the European Union, calling for more action to cut budget deficits in member states. However, the euro regained most of the ground in European trade to end the session at $0.9888.
London was weakened by a 4.8 percent drop in its biggest component, cellular operator Vodafone AirTouch (VOD). The stock had gained last week after its weighting was increased from 8 to 13.9 percent.
Elsewhere in the telecom sector, British Telecommunications (BT-A) lost 4.1 percent as investors clawed back gains in a stock that also gained ground last week. Cable & Wireless (CW-) ended 4.15 percent lower as its board examined the competing offers in the brewing bid battle for its 54 percent stake in Hong Kong Telecom.
 The FTSE managed to recover from a session low of 6,054 as oil and gas producer BP Amoco (BPA) regained some ground to end just 0.4 percent lower, the index's second-largest component having been 2 percent down earlier in the session. Sector rival Shell Transport & Trading shed 1.9 percent.
The media shares and technology stocks that have buoyed the market this year suffered the sharpest falls. Publisher Reed International LSE:REED] lost 6.7 percent and leisure group Hilton (HLT), which had climbed last week on plans to expand its online gaming operation, ended down 4.8 percent. Chip designer ARM Holdings (ARM) fell 3.2 percent
Mining group Billiton (BLT) was the worst performer, closing down 7.3 percent after beating expectations with a 46 percent rise in first-half net earnings.
PowerGen (PWG) shares fell 4.6 percent after the company unveiled plans to acquire Kentucky-based energy group LG&E Energy Corp. (LGE: Research, Estimates) for $5.4 billion.
Among financial stocks, HSBC Holdings (HSBA) narrowed earlier losses to close 0.4 percent lower after the company reported a rise in 1999 profits in line with expectations and unveiled a new Internet strategy. Royal Bank of Scotland (RBOS) bounced back from recent weakness to lead the index with a 7.5 percent advance, while its recent acquisition National Westminster Bank (NWB) gained 5.2 percent. Lloyds TSB (LLOY), Britain's largest retail bank, gained 3.8 percent.
In Frankfurt, the market also weakened on remarks by a senior Bundesbank council member suggesting that German equities are overvalued. Cyclical stocks suffered the heaviest selling pressure, with Fresenius Medical Care (FRES) down 5.9 percent, retailer Metro (FMEO) down 2.5 percent and Lufthansa (FLHA) off 3.5 percent. Deutsche Telekom (FDTE) retreated 2.7 percent as did technology company Siemens (FSIE).
 DaimlerChrysler (FDCX) rose 2.6 percent after the company reported a 32 percent jump in fourth-quarter earnings and announced a stock buyback plan. Adidas Salomon (FADS) led the index with a 5.7 percent advance ahead of its 1999 earnings release due Thursday.
Cyclicals also weighed on the CAC 40 in Paris, with Valeo (PVAL), Europe's largest auto parts maker, down 5.5 percent while retailer Pinault-Printemps Redoute (PPPR) shed 2.4 percent. However, it was the media and technology components that have fueled gains on the CAC this year that suffered across the board. Data communications provider Equant (PEQU) lost 4.1 percent, France Telecom (PFTE) fell 2.7 percent and chipmaker STMicroelectronics (PSTM) shed 3 percent.
 Engineering company Alstom (PALS) rose 2.3 percent to lead the CAC 40's gainers, helped by an upgrade to "accumulate" from Merrill Lynch.
In Madrid, Terra Networks closed down 5 percent after Europe's largest Internet provider by market value posted a wider net loss for 1999, though it met expectations and posted sharply higher sales. Publisher Wolters Kluwer was the worst performer in Amsterdam, losing almost 8 percent, and Credit Suisse parent CS Group weighed on the Zurich market with a 3 percent decline. 
--from staff and wire reports
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