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News > International
Europe posts big losses
August 8, 2001: 11:50 a.m. ET

Telecom and tech shares fall out of favour; Bayer shock sends shares reeling
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LONDON (CNN) - Telecom-related shares and high-tech issues dragged European markets down on Wednesday amid deepening concern about the outlook for profits.

Share indices in every major European market slipped into the red as brokers cut their recommendations on several widely held telephone stocks, including France Telecom and Deutsche Telekom.

 Market Movers
graphic FTSE 100 / FTSE 250
graphic DAX 30 / DAX 100
graphic CAC 40 / SBF 80
 
Frankfurt's Xetra Dax was down 2.1 percent at 5,630.50 in late trading, depressed not only by phone and tech shares but also by pharmaceuticals maker Bayer, which tumbled after saying it was withdrawing a key drug and warned on profits.

London's FTSE 100 closed down 1.1 percent at 5,476.5, and the blue chip CAC 40 index in Paris dipped 1.3 percent to 4,986.23.

Investors in technology shares turned increasingly nervous after U.S. high-tech giant Cisco Systems (CSCO: Research, Estimates), the world's biggest maker of computer networking equipment, on Tuesday posted an 86 percent drop in fourth-quarter earnings, and warned first-quarter revenue would fall 5 percent.

"We will see nervous trading ahead, as we have seen from Cisco that the worst is not yet over for corporate earnings," Philip Shaw, a market strategist at fund management company Investec, told CNN.

In the U.S. Wednesday morning, indices were little changed as a more optimistic mood on the economy offset disappointment over Cisco's worse-than-expected profit report. The Nasdaq composite index rose 4.68 points to 2,032.47, while the Dow Jones industrial average eased just 8.58 points, less than 0.1 percent, to 10,450.16.

European telecom operators' shares dived after investment bank Merrill Lynch lowered its recommendation on shares of Deutsche Telekom (FDTE), which lost 7.7 percent, and France Telecom (PFTE), which dropped 5 percent. Merrill changed its advice on both shares to "reduce" from "accumulate".

 Market Movers
graphic TechMark 100
graphic Nemax 50
graphic Nouveau Marché
 
The sell-off sent shares in the UK telecom sector reeling. Internet data carrier Energis (EGS) shed 5 percent, business telecom operator Colt Telecom Group (CTM) fell 6 percent, and mobile-phone operator Vodafone (VOD), the UK's biggest telecom company, retreated 4.7 percent.

Among makers of telecom equipment, Britain's Marconi (MONI), a heavy faller in recent days, gave up another 4 percent, Nokia of Finland, the world's No.1 mobile-phone maker, fell 4.6 percent, Swedish rival Ericsson dropped 2.7 percent, and Alcatel (PCGE) of France was down 4.1 percent. In Frankfurt, Siemens (FSIE) fell 1.3 percent.

Stocks in the semiconductor industry and other high-tech sectors were under pressure. STMicroelectronics (PSTM), the biggest chipmaker in Europe, fell 3.5 percent in Paris while second-ranked Infineon Techologies (FIFX) was down 4 percent. Rival chipmaker Philips Electronics dropped 1.8 percent.

In London, microchip designer ARM Holdings (ARM) slumped 4.5 percent, followed into the red by computer consultants Misys (MSY), down 6.5 percent, and CMG (CMG) losing 5.4 percent.

Bayer's nasty shock

Drug maker Bayer (FBAY) suffered the day's most spectacular fall, crashing 17.3 percent by late afternoon. The company said 2001 profits would miss expectations after it withdrew its cholesterol-lowering drug Baycol/Lipobay from sale in all markets except Japan in response to reports of side effects. Bayer's local drugs and chemicals rival BASF (FBAS) shed 2.5 percent.

Among smaller markets, the AEX index in Amsterdam fell 0.9 percent, the SMI in Zurich was 0.3 percent lower, and Milan's MIB30 index dipped 0.6 percent.

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 1.2 percent, with the chemicals sector sliding 5.4 percent while the telecom sector dropped 4.2 percent. The information technology sub-index was down 3.4 percent. graphic





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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.