Early weakness on Wall Street mixed in with worries about higher interest rates sent European bourses steeply lower. The FTSE Eurobloc 100 index, down 1.3 per cent at 1,067.94, is now almost 7 per cent below its July peaks. The FTSE Eurotop 100 index lost 1.5 per cent at 2,942.05 and the broader FTSE Eurotop 300 index fell 1.4 per cent at 1,290.07.
Frankfurt was pushed back on the defensive with the sellers returning in some force after Monday's brief respite. The Xetra Dax index came off 120.54 at 5,119.10. Deutsche Telekom fell €1.35 to €38 on the uncertain outlook for the group's US ambitions plus stock overhang worries following the issue of loyalty shares later this week. Investors who have stayed with Telekom since its stock market debut in 1996 will shortly receive bonus shares. Brokers fear this could quickly hit the market. Steel group Thys- sen Krupp lost €1.32 at €18.57 on a government suggestion that the Transrapid high-speed train project could be halted. Thyssen is a big partner in the project. Financials were mixed. Deutsche Bank added 43 cents at €62.10. HypoVereinsbank fell €2.80 to €54.81.
Cyclicals had a varied session. Engineer Linde fell €2.16 at €51.99 and Degussa Huels shed €1.13 at €32.27. However, not all chemicals stocks were in the doldrums. Bayer added 24 cents at €37. Paris slid late in the session as investors failed to find positive corporate news to offset worries about the US economy and stock market. The CAC-40 index ended 52.68 or 1.1 per cent lower at 4,543.92.
Defence stocks were weak on worries about the sector's prospects. Lagardere dipped €1.22 or 3.1 per cent to €38.75, while Thomson-CSF finished €1.37 or 4.2 per cent down at €31.01. Amsterdam fell back in line with the broad trend across Europe. The AEX index ended off 7.44 at 554.96. Financials were among the weaker sectors. Aegon lost €1.75 at €79.60 and ING came off €1.20 at €50.
Hoogovens was a firm feature. There was talk that the group along with merger partner British Steel planned to acquire the aluminium operations of Viag, the German utility in the process of refocusing via a merger with Veba. Trading volume was dull, but the shares ended €2.55 or 4.9 per cent higher at €54.15.
Milan outperformed other European bourses in thin trading depressed by the suspension of Olivetti, the telecoms group, and several of its subsidiaries. The Mibtel index ended 92 or 0.4 per cent lower at 24,210.
Oslo drew back as a fall in Brent crude oil helped outweigh the effect of the soaring gold price. The Total index ended 16.61 or 1.4 per cent lower at 1,184.98.
