article: Eurostocks end torrid week with bruising falls
by Gideon Long
*****
me: rising Euro is destructive to their economy, but why?
their Asian imports are unchanged in price
capital flows are moving toward Europe, which should be good
because American customers will be spending less???
because European banks hold significant USTBonds???
because they face a similiar debt collapse???
because declining dollar is calamitous for world economy???
methinks yes, yes, yes, yes !!!
:end me
*****
LONDON, July 19 (Reuters) - Some 200 billion euros were wiped off the value of Europe's top 300 companies on Friday as the region's stock markets ended one of the most turbulent weeks in their recent history with further punishing falls.
The French markets dived nearly 5.5 percent while London and Frankfurt lost more than 4.5 percent as companies on both sides of the Atlantic continued to serve up more evidence of pain than of gain in their earnings announcements.
Shares in Sweden's Ericsson (Stockholm:ERICb.ST - News) tumbled 18 percent after it announced one of the most discounted rights issues ever seen while German technology group Epcos (XETRA:EPCGn.DE - News) plummeted 15 percent after warning of a full-year operating loss.
By 1654 GMT, with only Frankfurt still trading, the FTSE Eurotop 300 index (^FTEU3 - News) of pan-European blue chips was 4.81 percent lower at 935.48 points.
That marked its second biggest one-day loss of the year, just behind the 5.2 percent fall registered this Monday, and left the index 5.5 lower for the week, anchored at at level not seen seen October 1998.
The narrower DJ Euro Stoxx 50 index (Zurich:^STOXX50E - News) dropped 5.28 percent, slithering below the 2,700-point mark. It is also mired at near-four-year lows.
Markets have been yanked up and down with dizzying speed this week and volatility remains perilously high.
"What markets need is direction and, more than anything else, confidence," said Roland Lescure, head of strategy and research at CDC Ixis Asset Management in Paris. "The market is cheap but that doesn't mean it's going to go up from here. That's going to take time."
The Ericsson and Epcos news helped chop more than six percent off the DJ Stoxx technology index (Zurich:^SX8P - News) but the sell-off was by no means limited to high-tech stocks.
The healthcare, insurance and energy indices all lost between five and six percent, rekindling fears that the broader market could be in for further blood-letting.
"I don't buy into the idea of a further 20 or 30 percent fall in share prices, or of lower long term returns from equities," Lescure said.
"However, in the short term anything could happen."
DISPARITY
Once again, there was a marked disparity between bleak corporate news and positive economic news.
U.S. trade deficit data highlighted robust demand for imported autos, food and consumer goods while U.S. consumer price data showed inflation in the world's economic powerhouse remained subdued.
But the data did little to convince Wall Street investors.
The Dow Jones industrial average (CBOT:^DJI - News) lost 3.22 percent, the broader Standard & Poor's 500 Index (CBOE:^SPX - News) was 2.49 percent lower and the tech-laden Nasdaq Composite (NasdaqSC:^IXIC - News) slipped 1.77 percent.
Next week, European investors will look to French telecom equipment maker Alcatel (Paris:CGEP.PA - News), chip maker STM (Paris:STM.PA - News), drug giants AstraZeneca (London:AZN.L - News) and Novartis (NOVZn.VX) and banks HBOS (London:HBOS.L - News) and Hypovereinsbank (XETRA:HVMG.DE - News) to lift their flagging spirits.
But if this week is anything to go by, the news will not be encouraging.
"Europe appears to be lagging behind the U.S.," Lescure said. "The cost-cutting that took place in the United States last year has only taken place in Europe more recently and will have to continue for a few more months.
"We can't expect a recovery in earnings until the end of this year or the beginning of next."
ERICSSON POUNDED
Ericsson stock was pounded after the loss-making telecoms equipment maker, trying to raise funds to cut debt and weather slumping demand, priced a $3.25 billion rights issue at a thumping discount of 74 percent.
It also announced its seventh straight quarter of losses and a further 5,000 job cuts.
"The share is falling on the below-consensus second-quarter sales, falling orders for mobile systems, the worse sales outlook, the rights issue and uncertainty why the price has been set so low," said Johan Strandberg, analyst at Deutsche Bank.
The news dragged Alcatel down 12.5 percent and Nokia (NOK1V.HE), which disappointed the market with its outlook on Thursday, fell 5.4 percent.
Healthcare stocks were buffeted by consolidation factors, fears over generic drug competition and concerns over the sector's exposure to the weak dollar, which remains well below parity with the euro (EUR=).
AstraZeneca offloaded 9.2 percent while Switzerland's Roche (ROCZg.VX) shed 8.1 percent.
Sentiment on the sector was also hit by news of a probe into U.S. drug giant Johnson & Johnson (NYSE:JNJ - News). The company said it believed the investigation was linked to alleged fraudulent book-keeping at one of its plants in Puerto Rico.
Insurers remained weak on concerns over solvency requirements and their exposure to falling equity markets. Zurich Financial (ZURZn.VX) was particularly badly hit, tumbling 11.2 percent.
Some saw the latest sell-off was a signal to buy.
"This is a good moment to be buying stocks, valuations are attractive and economic growth is coming through," said Teun Draaisma, European strategist at Morgan Stanley.
"A risk factor to be watched is the possibility that markets go into a sentiment-driven downwards spiral -- this would have a negative wealth effect, threatening the economic recovery."
(Additional reporting by Gareth Nicholson in London and Jan Strupczewski in Stockholm)
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