NEWS---Europe stocks bounce on euro buying
ECB, Fed, U.K., Japan revive euro, boost shares
By Joy Tadaki, Nadja Hahn & Peter Bale, FTMarketWatch
Last Update: 8:56 AM ET Sep 22, 2000 NewsWatch
Latest headlines
LONDON (FTMW) -- Major European equity markets bounced from their lows by mid-afternoon on Friday after the European Central Bank confirmed it had launched "concerted" intervention to support the struggling euro.
The euro jumped more than 5 percent against the dollar when the ECB announced it had joined with British, American and Japanese authorities to prop up the ailing currency, which has lost one-third of its value since its inception. See story.
The single European currency rose above 90 cents for the first time since September 4.
"That's definitely good news for the markets -- but one has to be a little bit careful -- we have to wait to see how effective it'll be," said James Dewhurst, equity salesman at Charterhouse Tilney in London. "The very immediate short-term effect is great news, but let's not too carried away too soon."
Following the intervention, markets in London, Paris and Frankfurt pared earlier losses. London's FTSE 100 (UK:1805550: news, msgs) benchmark jumped 1.2 percent from its intraday lows, but is still down 1 percent.
Chemicals, foods and cyclicals led gainers, while techs, telecoms and media shares declined.
Frankfurt's DAX 30 (DE:1876534: news, msgs) bounced 2.3 percent from its lows, but was still down 1 percent on the day. Paris's CAC 40 (FR:1804546: news, msgs) also rose 1.6 percent from its lows, and was 1.4 percent lower in afternoon trading. See Indices at a glance.
The pan-European FTSE Eurotop 100 (1805550: news, msgs) was down 1.6 percent, while the broader FTSE Eurotop 300 fell 1.4 percent.
Relief from tech slump
Europe's markets were previously battered early Friday by the fallout from a profit warning by U.S. chipmaker Intel (INTC: news, msgs).
The Intel warning "was the last straw to break the camel's back," said Thomas Zuschlag, who helps manage about 1 billion euros in European equities at DG Bank in Luxembourg. "In psychologically sensitive times, this reaction is a sharp exaggeration." See Intel's profit warning.
In Europe, chip-related shares topped the list of decliners. Dutch chip device maker ASM Lithography (ASML: news, msgs) led the drop, slumping 8.8 percent. U.K. chip designer ARM Holdings fell 7.1 percent. French-Italian chipmaker STMicroelectronics (FR:012970: news, msgs), one of Europe's largest, tumbled 4 percent.
Among other top chip makers in the region, German's Siemens (DE:723610: news, msgs) slipped 5.8 percent and Dutch electronics maker Phillips (PHG: news, msgs) shed 5.8 percent. Frankfurt's chip giant Infineon slipped 7.3 percent. See related chip story.
Techs slumped 4.8 percent as a group, falling to a four-month intraday low, while telecoms slipped 3 percent to their lowest level since November 8, 1999.
Defensives gain
On the upside, food and drug shares gained, as investors fled to defensive shares. Britain's largest supermarket chain Tesco (UK:TSCO: news, msgs) were among the top gainers on the Eurotop 100 (1883619: news, msgs), up 2.9 percent.
German pharmaceutical and chemicals maker Bayer (DE:575200: news, msgs) also rose nearly 2.5 percent, while British Airways (UK:BAY: news, msgs) (BAB: news, msgs) gained 1.7 percent following an upgrade by Morgan Stanley and after the airline said its merger talks with KLM (KLM: news, msgs) had ended. See MarketPulse. See related story.
Spreading the gloom
Overnight, the Nasdaq Composite (COMP: news, msgs) slipped 1.8 percent, while Intel, the world's largest computer chip maker, plunged 20 percent in after-hours trading.
Those woes spread to Friday's Asian trading, with the Hang Seng Index (1804580: news, msgs) tumbling 3.6 percent and the Nikkei 225 (65599W10: news, msgs) benchmark average down more than 3 percent. See closing U.S. stock report. See Friday's Asian stock report.
Knock-on effect
However, analysts said a distinction should be drawn between Intel and most of the European chipmakers.
"European companies such as STMicroelectronics and Philips are much more focused on telecoms and consumer electronics than PCs," said Eric de Graaf, a technology analyst at ING Barings in Amsterdam. "But no one really cares now," he added.
Losses also had a knock-on effect, spreading to telecom equipment makers. Shares of Swedish mobile giant Ericsson (ERICY: news, msgs) topped the list of decliners on the Eurotop 100, falling almost 7 percent, while Nokia (NOK: news, msgs) shed 5.6 percent. France's Alcatel (FR:013000: news, msgs) fell 3.8 percent. Vodafone (VOD: news, msgs) (UK:VOD: news, msgs) fell 1.3 percent.
Firmly in the red
PC sellers and hardware makers were among the biggest losers, putting a drag on the TechMARK index. U.K. PC hardware and services provider Computacenter (UK:CCC: news, msgs) led the declines, falling 10.6 percent to 350.5 pence, after falling from highs of £15 this year.
Other losers included software provider Cedar Group (UK:CED: news, msgs), down 4.5 percent. Insurance software company Innovation Group (UK:TIG: news, msgs) fell 9.5 percent.
Some observers, however, said the Intel-inspired falls had created a buying opportunity. "We are buying at these levels," said DG Bank Luxemburg's Zuschlag. "In relation to their products those stocks really look cheap."
See Thursday's European stock report. |
