Europe sinks on Infineon

June 20, 2001 Posted: 1654 GMT

NEW YORK (CNNfn) -- Europe's major bourses closed lower  Wednesday after German chipmaker Infineon Technologies issued a profit warning.

Infineon, Europe's No. 2 chipmaker, said it would post a loss of 600 million ($510 million) in the third quarter and revenue would decline by 30 percent as demand from mobile phone makers shows no sign of recovery.

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Shares in Infineon (FIFX) plunged 15.34 percent in Frankfurt and ST Microelectronics (PSTM), Europe's biggest chipmaker, lost 3.7 percent. Phillips Electronics was down 3.4 percent.

Frankfurt's electronically traded Xetra Dax fell 43.20 points, or 0.8 percent, to 5,695.3. Communications firm Siemens (FSIE), which owns 71 percent of Infineon, fell 5.3 percent. Its Epcos (FEPC) electronics components unit lost 4.3 percent.

London's FTSE 100 ended up 0.26 percent at 5,695.3, as telecom equipment maker Marconi (MONI) fell 6.7 percent after U.S. rival Tellabs (TLAB: Research, Estimates) slashed its second-quarter outlook, echoing moves by rivals such as Lucent (LU: Research, Estimates) and Nortel (NT: Research, Estimates).

Vodafone (VOD), the world's biggest mobile phone operator and the FTSE's second-biggest stock, rose 0.3 percent.

In Paris, the CAC 40 blue chip index shed 0.55 percent to 5,170.8. Alcatel (PCGE), Europe's fourth-largest telecom equipment maker, lost 3.05 percent, France Telecom (PFTE) slipped 1.9 percent, and its mobile phone unit Orange (PORA) lost 1.38 percent.

Peter Oppenheimer, market strategist at HSBC, told CNN the market would continue to weaken as investors "focus on pre announcements [profit guidance] from companies."

All eyes are on the technology sector and in particular the "chip sector for any signs of recovery, but there is no positive news coming through," Oppenheimer added.

In Amsterdam, the AEX index fell 0.8 percent and the SMI in Zurich was 0.7 percent lower. The MIB30 in Milan dropped 0.9 percent.

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 0.3 percent.

One of the biggest components in the Eurotop's information technology sector, Finland's Nokia fell 0.8 percent and Swedish rival Ericsson declined 5 percent.

Europe's leading airlines came under pressure after U.S. rivals Northwest Airlines  (NWAC: Research, Estimates) and United Airlines parent UAL (UAL: Research, Estimates) said earning will miss expectation as a global economic slowdown begins to bite.

British Airways (BAY), Europe's second-largest, fell 1.35 percent, Deutsche Lufthansa, the biggest, (FDTE) rose 2.1 percent, and Air France (PAF) declined 4.07 percent.

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In midday Wall Street trading, the Nasdaq composite index rose 7.32 points, or 0.4 percent, to 1,999.98, its first gain since June 7. The Dow Jones industrial average rallied to gain 8.12 points, or 0.08 percent, to 10,604.79.

In the currency market, the euro slipped to 85.23 U.S. cents from 85.39 cents in late New York trade Tuesday.

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