Selloff triggered by selloff on Europe banks
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European Stocks Tumble; Europe Stoxx 50 Drops to 17-Month Low
By John Fraher
London, March 14 (Bloomberg) -- European stocks tumbled, pushing the Dow Jones Stoxx Europe 50 Index to a 17-months low. Ericsson AB, HSBC Holdings Plc and Cable & Wireless Plc slumped amid concern earnings growth is slowing.
``At some point people say `I can't stand it anymore' and sell everything,' said David Donnelly, who manages a $27 million hedge fund at Gordon House Asset Management. ``There's no likelihood of a turnaround in earnings growth at the moment.'
Every stock in the DJ Europe Stoxx 50 Index fell, pushing the index down 139.49 points, or 3.5 percent, to 3856.26, its lowest since October 1999. The U.K.'s benchmark FT-SE 100 Index, Germany's DAX Index and France's CAC-40 Index all dropped 3 percent or more.
Deutsche Bank AG, Societe Generale SA and other banks fell after Goldman, Sachs & Co. cuts earnings forecasts on concern slumping stocks will crimp their trading income.
Ericsson slipped 4.5 Swedish kronor, or 7 percent, to 59.5. The No. 1 maker of equipment for mobile-phone networks may have its credit ratings cut by Standard & Poor's and Moody's Investors Service after the company said it expects to post a first-quarter loss.
Banks Slide
HSBC, Europe's biggest bank by market value, declined 57p, or 6.6 percent, to 808. DaimlerChrysler, the No. 5 carmaker, slipped 2.2 euros, or 4.2 percent, to 50.58.
Cable & Wireless Plc fell 67p, or 12 percent, to 478, extending yesterday's 20 percent drop after saying it will reduce staff amid slowing sales.
The telecommunications and technology indexes posted the worst declines among the 18 industry groups, falling 5.3 percent and 5.2 percent, respectively. The 18 Stoxx industry groups fell, twelve by more than 3 percent. Eighty-four percent of stocks in the 600-member Europe DJ Stoxx Index declined as the index slipped 8.54 points, or 2.6 percent, to 315.80.
Societe Generale paced declines among banks after Susan Leadem, an analyst at Goldman Sachs, cut forecasts in the industry amid concern that declining equity markets will crimp trading income.
Societe Generale declined 4.3 euros, or 6.4 percent, to 63. Leadem reduced earnings per share forecasts for France's third- largest lender by 6 percent in 2001 and 2002.
Deutsche Bank slipped 5.07 euros, or 5.8 percent, to 81.96. Goldman cut earnings per share forecasts for Germany's biggest bank by 29 percent for 2001.
Dresdner AG and Commerzbank AG also had their forecasts cut at Goldman. Dresdner, Germany's third-biggest bank, declined 1.63 euros, or 3.8 percent, to 41.77. Commerzbank, the fifth biggest, slipped 67 cents, or 2.2 percent, to 29.26. |
