Europe tumbles to a finish

LONDON, England (CNN) -- European markets tumbled to a close on Monday in the wake of another high-profile U.S. bankruptcy filing and a new round of heavy selling on Wall Street.

London's FTSE 100 fell 5 percent, or 202.8 points, to 3,895.5 -- its lowest closing level in six years and wiping £48 billion off the UK top stocks. The CAC 40 blue chip index in Paris lost 5.6 percent, or 174.35 points, to 3,149.69, the worst finish in almost four years. Frankfurt's electronically traded Xetra Dax was down 5.9 percent, or 229.33 points, to 3,662.55 in late trading (the German market was set to close at 1800 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, dropped 5 percent to 888.91, near four-year lows. The life assurance, insurance, oil and gas, and engineering sub-sectors were the top decliners. Only the tobacco sector was higher.

"Investors are getting murdered by the volatility, and I can't see trading conditions returning to normal until after the [summer] holiday season has ended," Robert Kerr, pan-European strategist at Bank of America, told Reuters.

Markets were jarred by news that WorldCom (WCOME) had filed for Chapter 11 bankruptcy protection on Sunday, crushed by debts totalling $41 billion. WorldCom, with $107 billion in assets, is the largest bankruptcy filing in United States history, dwarfing that of Enron Corp.

Friday's sell-off on Wall Street -- triggered by news that the government had launched an investigation into allegations of improper accounting at Johnson & Johnson.(JNJ) -- continued early on Monday as U.S. investors digested the WorldCom developments.

European insurance stocks were among the biggest losers across the continent, led by Dutch insurer Aegon, which plunged 17.8 percent to 13.91 euros.

Aegon said on Monday it would strengthen its reserves because of deteriorating stock markets and warned 2002 net profit would be 30-35 percent lower than it previously predicted. Insurance companies invest vast amounts of their money into the stock market and falling indexes can hurt their ability to meet insurance claims. (Full story)

France's Axa (PCS), Europe's biggest insurance company, lost 10.9 percent to 12.09 euros, while Britain's Aviva (AV) dropped 9.7 percent to 398.68 pence and rival Prudential (PRU) fell 8 percent to 457.25 pence. Munich Re, Europe's biggest reinsurer, (FMUV2) slid 7.5 percent to 184.10 euros.

In the energy sector, Royal Dutch, which owns 60 percent of the world's second-largest oil company Royal Dutch/Shell, dived 9.8 percent to 41.04 euros. On Monday, it and consumer goods giant Unilever (ULVR) were dumped out of the Standard & Poor's 500 index. S&P announced on July 10 it was rejigging its index to focus on U.S. stocks. Unilever slid 6.2 percent to 52.40 euros in Amsterdam.

Hugo Boss, the German fashion house, plunged 17.7 percent to 12.10 euros after announcing its second profit warning in less than 2 months. Full story)

Vivendi Universal (PEX), the world's second-biggest media company, fell 6.7 percent to 16.28 euros, after going in and out of negative territory all session. French newspaper Le Figaro said Europe's biggest pay-TV company Canal Plus would be broken up to help rescue the Franco-American media giant. (Full story)

Deutsche Telekom (FDTE) was down 2.7 percent to 11.53 euros in late Frankfurt trading, while France Telecom (FTE) fell 4.2 percent to 13.62 euros and its mobile phone unit Orange (ORA) lost 2.5 percent to 4.78 euros.

On the bright side in Europe, Novartis, the region's third-biggest drug maker, was up 0.5 percent to 50.75 Swiss francs in late trading after the company posted profits in line with analysts' expectations and pledged to make a record net profit in 2002. (Full Story).

The AEX index in Amsterdam fell 6.9 percent and Milan's MIB30 index lost 3.3 percent, while the SMI in Zurich declined 5.6 percent.

In the U.S. on Monday, markets were volatile in early trading as the bankruptcy filing of troubled telecom WorldCom (WCOM) competed with positive results from diversified manufacturer 3M [USA;MMM]and news of a stock buyback from household products maker Procter & Gamble (PG).

At midday, the Dow Jones industrial average was down 45.55 points to 7,973.71, while the Nasdaq composite index was off 11.91 points to 1,307.24. The Standard & Poor's 500, which was down 8.79 points to 838.96.