European stocks stumble on poor company news

Published Jun 4, 2003

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London - European stock markets were mostly lower in early trading on Wednesday as disappointing news from corporate heavyweights such as Cable and Wireless and DaimlerChrysler took the shine off US gains overnight.

The British FTSE 100 index lost 0.31 percent to 4,102.9 points, the French CAC 40 index slipped 0.02 percent to 3,038.9 points, though the German DAX 30 index rose 0.15 percent to 3,031.3 points.

The DJ Euro Stoxx 50 index of leading euro-zone shares fell 0.14 percent to 2,363.1 points.

The euro stood at $1.1732.

The weak start came despite modest gains on US markets on Tuesday, when the Dow Jones industrial average rose 0.28 percent and the technology-laden Nasdaq index climbed 0.81 percent.

European auto companies were under pressure after German-US giant DaimlerChrysler warned late Tuesday that its US unit was set for an operating loss of around €1 billion (R9.5 billion) in the second quarter.

DaimlerChrysler also cautioned that it would be difficult to achieve its full-year target of operating profit of €2 billion for Chrysler.

The price of shares in DaimlerChrysler slumped 4.6 percent to €25.51.

Rival companies also suffered: Volkswagen fell 1.4 percent to €31.07 and BMW lost 0.5 percent to €29.17 in Frankfurt, while in Paris Renault gave up 1.4 percent to €38.06 and Peugeot slid 4.4 percent to €37.82.

Deutsche Bank, which owns a 12.1 percent stake in DaimlerChrysler, dropped 0.9 percent to €52.81.

In London shares in Cable and Wireless plunged 8.3 percent to 88.75 pence after the telecommunications group unveiled a radical restructuring plan which will see it withdraw from the United States and cut about 1,500 jobs in Britain.

The news came as the company reported a full-year underlying loss of £224 million (R2.94 billion), wider than the £14 million loss it posted the previous year.

"There are some positives to be taken from the statement - full exit from the US, winding down of the continental European business, resilience of the regional business," commented Nomura Securities analyst Chris Alliot.

"But we believe that the negatives - lower than expected results, no full exit from C and W Global, low UK profitability and the cancellation of the dividend - will be the focus, and we expect profit-taking as a result."

Earlier on Wednesday in Asia, Japanese share prices eased 0.08 percent with early gains erased by profit-taking on a lack of leads to maintain the market's recent upward momentum, dealers said. The Hong Kong market was closed for a public holiday. - Sapa-AFP

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