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European markets routed |
| London plunges 4.1%; Swiss cut
rates to stop selloff after profit warning |
March 22,
2001: 12:52 p.m. ET
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LONDON (CNN) - European stock
markets were routed on Thursday, in a broad-based
decline led by old economy stocks, after a series of
profit warnings.
 London's key index plunged to its biggest one
day percentage loss since October 1992, while the Swiss
cut interest rates to stop a abrupt sell-off after
Zurich Financial Services issued profit
warning.
Sharp selling on Wall Street plunged
European markets further into the red on concerns the
U.S. economic slowdown could spread to the rest of the
world.
There was still disappointment that U.S.
interest rates were only cut by 0.5 percentage
points.
"Stocks should continue to sag under the weight of
the Fed's disappointing rate response on Tuesday and the
European Central Bank's refusal to admit to the risks
emanating from global economic weakness," economist at
Bear Stearns wrote in a note to
investors.
London's benchmark FTSE 100
index, Europe's biggest stocks market, dropped 4.1
percent, or 227.4 points, to close at 5,313.3, its
lowest level in 29 months.
Zurich SMI
plunged 5.6 percent on the back of Zurich Financial
Services' profit warning. The Swiss National Bank
surprised markets by cutting its key interest rate
target by 0.25 percentage points, citing growing
economic uncertainty amid sharp plunges in global equity
markets and a reduced risk of inflation.
 Frankfurt's late trading Xetra
Dax plunged 4 percent, or 230.19 points, to trade at
5,391.90. Europe's biggest automaker Volkswagen
(FVOW)
and communications-to-engineering conglomerate
Siemens (FSIE)
were among the biggest percentage losers.
In
Paris, the blue-chip CAC 40 shed almost 4
percent, or 189.94 points, to a 17-month low of
4,824.82, led by consumer electronics maker Thomson
Multimedia (PTMM)
and insurer AXA (PAXA).
Amsterdam's
AEX index fell 4.4 percent as electronics
manufacturer Philips tumbled 5.9 percent. Milan's
MIB30 lost 4.8 percent.
 The broader FTSE Eurotop 300
index, a basket of Europe's largest companies was 4.1
percent lower, with the insurance component down 7.2
percent and the electronics sub-index 6 percent
lower.
In the currency market, the euro weakened
against the dollar, buying 88.50 U.S. cents, compared
with 89.65 cents in late New York trading a day
earlier.
U.S. markets fell sharply in midday
trade on Thursday. The tech-laden Nasdaq
composite shed 1.4 percent to 1,803.87, while the
blue-chip Dow Jones industrial average slid more
than 3 percent, or 289.68 points, to hit
9,197.32.
UK controls maker Invensys (ISYS)
dived 9.9 percent after saying that second-half
operating profit before exceptional items would be
marginally lower
than the first half. The company also said it would cut
5,000 jobs by the end of the year.
Banking and
financial stocks dropped sharply after Zurich
Financial Services plunged more than 20 percent
after reporting a disappointing fall in profit and
saying there would be no growth in the current
year.
Germany's Allianz (FALZ)
dropped 5.3 percent and French insurance rival
AXA (PCS)
fell 9.4 percent to  111.30 after
UBS Warburg reduced its target price to 125.00.
AGF (PAGF),
France's second-biggest insurer, slipped 3.5
percent.
UBS, Switzerland's biggest bank,
dropped 7.3 percent and close rival Credit Suisse
Group declined 4.8 percent. In Germany, Deutsche
Bank (FDBK)
slipped 4.6 percent, Dresdner Bank (DRB)
dipped 4.1 percent and HypoVereinsbank shed 2.5
percent.
Among other old economy stocks racking
up big dips, building materials firm Lafarge (PLG)
fell 7 percent. German sporting goods maker adidas
Salomon (FADS)
slipped 2.2 percent.
Automaker Volkswagen
(FVOW)
skidded 8.5 percent, despite saying 2001 profit should
rise this year.
Engineering and electronics maker
Siemens (FSIE)
fell 6 percent in Frankfurt, while its electronic
component unit Epcos (FEPC)
fell 3.6 almost 5 percent. French consumer electronics
maker Thomson Multimedia (PTMM)
dropped 9.3 percent.
London-listed South African
network service provider Dimension Data
(DDT)
plunged 9.6 percent after investment bank UBS Warburg
downgraded its earnings forecast for 2001 by 8 percent
and for 2002 by 15 percent.
Technology stocks
continued their downward slide. Nokia, the
world's biggest handset manufacturer, fell 5.6 percent
and Sweden's Ericsson dropped almost 3.4
percent.
Sonera, the Finnish telecom
operator, fell 7 percent after the government, which
owns 53 percent of the telecom company, fired almost the
entire board because the stock had fallen more than 90
percent in the last year.
France Telecom
(PFTE)
fell 3.2 percent after posting slightly
weaker-than-expected 2000 profit.
But it wasn't
all doom and gloom for tech stocks. German chipmaker
Infineon Technologies (FIFX)
rose 4.1 percent after U.S. rival Micron
Technology (MU:
Research,
Estimates)
said it was experiencing a pick up in personal computer
chip demand. And Paris-listed rival
STMicroelectronics (PSTM)
nosed up 0.6 percent and ASM Lithography, which
makes equipment to manufacturer chips, rose 1
percent. 
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