24/06/2003 15:05
Equity markets in Europe slipped on Tuesday afternoon, extending losses as investors remained wary about the prospect for an economic recovery ahead of the Federal Reserve's interest rate decision.
The pan-European FTSE Eurotop 300 index was 0.4 per cent weaker at 858.1, after dropping 1.8 per cent on Monday when warnings from consumer goods makers Heineken and Unilever shook investor sentiment. Speculation about other companies in trouble followed on Tuesday and weighed on market sentiment.
Frankfurt's Xetra Dax slipped 0.1 per cent to 3,183.2, the Paris CAC 40 was 0.4 per cent weaker at 3,106.9 and in London the FTSE 100 fell 0.4 per cent to 4,071.9. See London markets report
After rallying more than 11 per cent in the last month, investors have been questioning how much further European stock markets could rally and the Eurotop has dropped more than 3 per cent since last Thursday.
However, the expectation of a large rate cut in the US was seen as a potential trigger for economic growth and prevented a bigger sell-off.
The Fed is widely expected to cut interest rates on Wednesday but the market is still undecided if it is going to cut the current rate of 1.25 per cent by 25 basis points or 50 points.
In New York the Dow Jones Industrial Average was seen falling 11 points to 9,062 and the Nasdaq Composite was expected to open 3 points lower at 1,607, extending Monday's sharp falls. See more on US markets
In Europe on Tuesday Suez, the French utility company, slumped more than 8 per cent after BNP Paribas downgraded the stock, prompting fears that the company might be about to lower its earnings guidance. James Grant of BNP said recent conversation with Suez pointed to a full-year net profit of between €500m and €600m, well below the current consensus of about €900m.
The stock was downgraded to "underperform" from "neutral" and the price target lowered to €14.7 from €16. The shares were 6.8 per cent lower at €13.85 after hitting a low of €13.55. French utility group Veiola Environnement was 1 per cent lower at €18.28 and Germany's RWE fell 2 per cent to €26.01.
ABB gave up early gains as investors were left with unanswered questions after a US court effectively approved the Swiss-Swedish engineering company's asbestos settlement proposal.
In the ruling, which caps ABB's liability claims at $1.3bn, the court asked for additional information from its US operations, which made some investors nervous. "The company has always said the approval would be almost a formality, but this ruling leaves some unanswered questions," said on Stockholm-based analyst.
Shares in ABB, which have already risen more than 20 per cent in the last two weeks on hopes that the deal would be approved, rose more than 4 per cent in the morning but traded down 2.5 per cent at SFr4.68 in the afternoon in Zurich.
Saint-Gobain, the French building materials group which also faces asbestos-related compensation claims in the US, was 0.2 per cent stronger at €33.57.
Orange, the Anglo-French mobile phone operator, rose after the company said it aimed to increase core earnings by 15-17 per cent per year between 2003 and 2005, which would produce cash flow of €14bn. Solomon Trujillo, the new chief executive, said the company was on track to achieve 5 per cent revenue growth in the current year.
Orange is also joining the cross-border alliance with rival Telefonica of Spain, Deutsche Telekom's T-Mobile and Italian operator TIM in an attempt to raise the competition against global market leader Vodafone.
Orange shares were 1.9 per cent stronger at €7.51 and parent France Telecom was 2.7 per cent higher at €20.32. Rival Deutsche Telekom rose 2.3 per cent to €13.20.
Paper and packaging companies were lower after Avery Dennison of the US warned of lower that expected quarterly profits on Monday night. In Helsinki, UPM Kymmene fell 3.7 per cent to €12.61 and Stora Enso was 3.6 per cent weaker at €9.59.
Credit Suisse Group is in talks to buy a 9.9 per cent stake in the property insurance unit of Gerling, the troubled German insurange group, according to the Financial Times Deutschland. Credit Suisse has recently sold off insurance assets in the UK and Italy for more than €3bn. Shares in Credit Suisse were 1 per cent weaker at SFr36 in Zurich.
Unilever, the Anglo-Dutch conusmer goods maker, extended Monday's 10 per cent slump after the maker of Lipton tea and Dove soap warned that sales would miss its original targets this year. The shares were another 2.7 per cent lower at €46.42 in Amsterdam.
Heineken also extended its slide, dropping 2.2 per cent to €29.23 after it on Monday warned that sales were lagging expectations and first-half earnings would not improve on last year's figures. Goldman Sachs downgraded both Unilever and Heineken on the back of the warnings.
Interbrew, the Belgian brewer behind brands such as Stella Artois, was 4 per cent weaker at €18.43 and Grolsch fell 2 per cent to €21.68.
Reports that Fiat, the Italian auto and industrial group, was preparing another multi-billion euro rescue loan package, including a capital increase, sent the shares sharply lower in Milan. Fiat's leading creditors, UniCredito and Banca Intesa, were pushing for a €2bn syndicated loan and a €1.8bn share issue to bolster Fiat's balance sheet. The shares dropped 3.7 per cent to €6.67.
The pan-European FTSE Eurotop 300 index was 0.4 per cent weaker at 858.1, after dropping 1.8 per cent on Monday when warnings from consumer goods makers Heineken and Unilever shook investor sentiment. Speculation about other companies in trouble followed on Tuesday and weighed on market sentiment.
Frankfurt's Xetra Dax slipped 0.1 per cent to 3,183.2, the Paris CAC 40 was 0.4 per cent weaker at 3,106.9 and in London the FTSE 100 fell 0.4 per cent to 4,071.9. See London markets report
After rallying more than 11 per cent in the last month, investors have been questioning how much further European stock markets could rally and the Eurotop has dropped more than 3 per cent since last Thursday.
However, the expectation of a large rate cut in the US was seen as a potential trigger for economic growth and prevented a bigger sell-off.
The Fed is widely expected to cut interest rates on Wednesday but the market is still undecided if it is going to cut the current rate of 1.25 per cent by 25 basis points or 50 points.
In New York the Dow Jones Industrial Average was seen falling 11 points to 9,062 and the Nasdaq Composite was expected to open 3 points lower at 1,607, extending Monday's sharp falls. See more on US markets
In Europe on Tuesday Suez, the French utility company, slumped more than 8 per cent after BNP Paribas downgraded the stock, prompting fears that the company might be about to lower its earnings guidance. James Grant of BNP said recent conversation with Suez pointed to a full-year net profit of between €500m and €600m, well below the current consensus of about €900m.
The stock was downgraded to "underperform" from "neutral" and the price target lowered to €14.7 from €16. The shares were 6.8 per cent lower at €13.85 after hitting a low of €13.55. French utility group Veiola Environnement was 1 per cent lower at €18.28 and Germany's RWE fell 2 per cent to €26.01.
ABB gave up early gains as investors were left with unanswered questions after a US court effectively approved the Swiss-Swedish engineering company's asbestos settlement proposal.
In the ruling, which caps ABB's liability claims at $1.3bn, the court asked for additional information from its US operations, which made some investors nervous. "The company has always said the approval would be almost a formality, but this ruling leaves some unanswered questions," said on Stockholm-based analyst.
Shares in ABB, which have already risen more than 20 per cent in the last two weeks on hopes that the deal would be approved, rose more than 4 per cent in the morning but traded down 2.5 per cent at SFr4.68 in the afternoon in Zurich.
Saint-Gobain, the French building materials group which also faces asbestos-related compensation claims in the US, was 0.2 per cent stronger at €33.57.
Orange, the Anglo-French mobile phone operator, rose after the company said it aimed to increase core earnings by 15-17 per cent per year between 2003 and 2005, which would produce cash flow of €14bn. Solomon Trujillo, the new chief executive, said the company was on track to achieve 5 per cent revenue growth in the current year.
Orange is also joining the cross-border alliance with rival Telefonica of Spain, Deutsche Telekom's T-Mobile and Italian operator TIM in an attempt to raise the competition against global market leader Vodafone.
Orange shares were 1.9 per cent stronger at €7.51 and parent France Telecom was 2.7 per cent higher at €20.32. Rival Deutsche Telekom rose 2.3 per cent to €13.20.
Paper and packaging companies were lower after Avery Dennison of the US warned of lower that expected quarterly profits on Monday night. In Helsinki, UPM Kymmene fell 3.7 per cent to €12.61 and Stora Enso was 3.6 per cent weaker at €9.59.
Credit Suisse Group is in talks to buy a 9.9 per cent stake in the property insurance unit of Gerling, the troubled German insurange group, according to the Financial Times Deutschland. Credit Suisse has recently sold off insurance assets in the UK and Italy for more than €3bn. Shares in Credit Suisse were 1 per cent weaker at SFr36 in Zurich.
Unilever, the Anglo-Dutch conusmer goods maker, extended Monday's 10 per cent slump after the maker of Lipton tea and Dove soap warned that sales would miss its original targets this year. The shares were another 2.7 per cent lower at €46.42 in Amsterdam.
Heineken also extended its slide, dropping 2.2 per cent to €29.23 after it on Monday warned that sales were lagging expectations and first-half earnings would not improve on last year's figures. Goldman Sachs downgraded both Unilever and Heineken on the back of the warnings.
Interbrew, the Belgian brewer behind brands such as Stella Artois, was 4 per cent weaker at €18.43 and Grolsch fell 2 per cent to €21.68.
Reports that Fiat, the Italian auto and industrial group, was preparing another multi-billion euro rescue loan package, including a capital increase, sent the shares sharply lower in Milan. Fiat's leading creditors, UniCredito and Banca Intesa, were pushing for a €2bn syndicated loan and a €1.8bn share issue to bolster Fiat's balance sheet. The shares dropped 3.7 per cent to €6.67.
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