European markets tumble

October 1, 2001 Posted: 1626 GMT

LONDON (CNN) -- Europe's major bourses closed lower on Monday, dragged down by technology, oil and food sectors as well as a falling Wall Street.

Fears that last month's U.S. terror attacks would hurt profits continued to weigh heavily on sentiment.

London's FTSE 100 plunged 2.7 percent, or 131 points, to close at 4,772.5, while the CAC 40 blue chip index in Paris lost 1.8 percent, or 74.5 points, to end at 4,004.6. Frankfurt's Xetra Dax dived 2.8 percent, or 119 points, to 4,189.04.

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Dutch food group Numico warned on Monday its third-quarter results were hard hit by the attacks in the United States. Numico's stock plunged 24.9 percent in Amsterdam, while the benchmark AEX index slipped 3.6 percent.

Numico's supplements business in the U.S. is facing a slowdown, the company said. Food supplements account for more than 60 percent of the group's turnover.

The European bourses had found no support from the U.S., where the main markets fell despite manufacturing activity data coming in better than expected.

Meanwhile, Reuters Eurozone Purchasing Managers' Index hit the lowest level in its four-year history in September and Japan's Tanken survey showed further deterioration in business confidence. 

In London, Cadbury Shweppes (CRBY), the world's third-largest soft drinks company, ended 4.6 percent lower after filing an anti-trust suit in the United States against rival PepsiCo (PEP: Research, Estimates).

Cadbury claims PepsiCo has an anticompetitive agreement with the number one U.S. fast-food chain Tricon (YUM: Research, Estimates), which effectively penalised Tricon's KFC, Taco Bell and Pizza Hut outlets for carrying supplies of 7 UP.

Switzerland's Nestle, the world's biggest food company, fell 2.3 percent in Zurich after analysts at Credit Suisse First Boston cut its stock price target to 370 Swiss francs from 425 Swiss francs. CSFB also cut Anglo-Dutch Unilever's (ULVER) target price to 430 pence from 500p. The stock lost 5.2 percent in London.

Siemens (FSIE), the world's third-biggest mobile phone maker, fell 2.1 percent. The German company declined to comment on a report that it was in talks with U.S. rival Motorola (MOT: Research, Estimates) about a joint venture for its wireless infrastructure or handset business.

Infineon Technologies (FIFX), Europe's second largest chip maker, dropped 6.2 percent to 12.66. Investment bank UBS Warburg said on Monday it had cut its price target for Infineon to 10 from 25 and repeated a "hold" rating on the stock.

STMicroelectronics (PSTM), Europe's biggest chipmaker, lost 1.2 percent in Paris and Philips Electronics, the region's No. 3, dipped 4.3 percent in Amsterdam. ASML, the world's biggest supplier of chip making equipment, dipped 2.2 percent and Europe's biggest chip designer ARM Holdings (ARM) declined 4 percent.

France Telecom (PFRA) led the losers in Paris to end 7.3 percent lower. The country's dominant phone company said it had paid the first installment for French high speed wireless licenses, which give it the right to offer video, internet and video services.

The European Aeronautics, Defence and Space Company (EADS), Europe's biggest defence company, dropped 6.8 percent after being taken off Goldman Sachs' "recommended list" due to declining demand for the global civil aircraft market.

Vivendi Universal, Europe's biggest media company, lost 2.6 percent. Its SFR mobile phone unit paid 619 million into an account that the French government cannot access in protest at the high cost and tight payment schedule for next-generation mobile phone licences in France.  The French Finance Ministry was examining on Monday the legal implications of SFR's decision, a government source told Reuters.

Oil and gas shares were battered by weaker prices for crude oil, after OPEC exporters decided against further restrictions on supply despite the world economic slowdown.

European benchmark Brent crude oil for November delivery fell 88 cents a barrel to $22.40.

In London, BP (BP-), the world's third-largest publicly traded oil company, ended 6.2 percent lower while Shell Transport & Trading was off 4.5 percent. Royal Dutch declined 3.9 percent.

Swissair, Europe's fifth biggest airline, was suspended in Zurich as the Swiss government and the airline considered plans that could see the carrier file for bankruptcy.         

Switzerland's two biggest banks, which have put forward a 1 billion Swiss franc rescue plan for the debt-laden company, fell. UBS lost 1.6 percent and Credit Suisse Group dropped 4.3 percent.

The SMI in Zurich was 1.6 percent lower and Milan's MIB30 index dipped 2.6 percent.

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The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 2.6 percent, with the information technology, telecom, food production and oil and gas sectors all in negative territory.

In the U.S., the main indices retreated from the previous week's rally as investors shrugged off a better-than-expected report on manufacturing amid continuing economic pessimism.

Manufacturing activity came in better than expected, according to the National Association of Purchasing Management's index, which measured a period that included the September 11 attacks against the United States. The index fell to 47.0 in September from 47.9 in August, beating economists' predictions.

But some managers who participated in the survey said it was too soon to assess how severely the attacks had damaged the world's largest economy.

In mid-morning trading, the Dow Jones industrial average was down 66.49 points at 8,781.07, while the Nasdaq composite fell 29.95 points to 1,468.85.

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