Bourses get bruised

August 17, 2001 Posted: 1629 GMT

LONDON (CNN) -- Markets across Europe careered lower Friday, with Germany's Dax falling to levels not seen for about two years as investors turned tail.

Frankfurt's key index slid 2.9 percent to 5,208.85 in late trading, close to its lowest level since October 1999, as jitters over the impact of economic slowdown on company profits returned to the fore.

London's FTSE 100 fell 0.9 percent to 5,342.1 and the blue chip CAC 40 index in Paris dropped 2.2 percent to 4,777.37.

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"Investors are getting concerned that we won't see a swift recovery in the U.S. economy," Merrill Lynch equity strategist Khuram Chaudhry told Reuters.� "People are concerned about currencies and whether the consumer is going to throw in the towel," he said.

Nervous trading on Wall Street

Wall Street opened lower, with the tech-heavy Nasdaq Composite index firmly in the red after weak reports late Thursday from widely watched IT players Dell Computer �(DELL: Research, Estimates) and Hewlett-Packard �(HWP: Research, Estimates).

The Nasdaq index fell 2.4 percent to1,884.43 by midday, while the Dow Jones industrial average dropped 120 points, or 1.2 percent, to 10,272.95. After the close Thursday, Dell, the leading personal computer maker

reported a net loss for the second-quarter amid eroding prices across the industry. And computer and printer maker Hewlett-Packard Co. reported that its fiscal third-quarter profit fell almost 90 percent, confirming a dire picture of the economy.

Many traders were said to be waiting on the sidelines for the outcome of the Federal Open Market Committee meeting on interest rates next Tuesday. Economists responding to a Reuters poll Thursday unanimously forecast� a quarter-percentage-point cut it the official federal funds rate to 3.50 percent.

In Europe, telecom stocks were among the region's weakest performers, but the sell-off wasn't restricted to this sector, embracing carmakers, media and retailing shares.�

In Frankfurt, MLP (MLP), the newest member of the blue chip index, looked as if it might soon head back down into mid-cap territory, tumbling 15.7 percent to head the list of losers on the Dax. Friday's loss came on top of a 6 percent decline the previous day, leaving the shares more than 60 percent below their 52-week high.

Carmakers and related companies lurched into reverse following Ford's announcement that it will slash between 4,000 and 5,000 jobs in response to a sharp decline in vehicle sales this year. Ford �(F: Research, Estimates) also told analysts it expects this year's earnings per share to be little more than half what they had been expecting.

Auto stocks in the doghouse

DaimlerChrysler (FDCX), a head-to-head rival of Ford both in North America and Europe, fell 7.3 percent, Europe's biggest carmaker Volkswagen (VOW) was down 5.1 percent, and luxury car firm BMW (FBMW) fell 3.5 percent.

Truck maker MAN (FMAN) dropped 5.2 percent. On Thursday, the company revealed accounting irregularities at ERF, its recently acquired UK arm, and suspended two of the unit's managers.

In France, PSA Peugeot Citroen (PUG) lost 2.5 percent and tyre maker Michelin (PML) dropped 3.1 percent. Schneider Electric (PSU), a maker of industrial automation equipment which that the automobile industry among others, shed 5.9 percent. While no car makers belong to London's FTSE 100 index, car parts maker GKN (GKN) was swept 5.1 percent lower.

In the telecom sector, shareholders in Deutsche Telekom (FDTE) saw no relief following their company's 25 percent decline in value in the past two weeks. The stock was down a further 3.6 percent, with analysts saying that expected sales of stock could push the price lower in the coming weeks.

Telecoms remain unpopular

For the second day, the list of losers on London's FTSE 100 was headed by telecom operators. Internet data carrier Energis [LDSE:EGS] sagged 6 percent, to follow its 11 percent drop Thursday. Colt Telecom Group (CTM) drooped 5.5 percent and Vodafone Group (VOD) was down 2.7 percent.

In Paris, France Telecom (PFTE) declined 4.6 percent and Orange (POGE), its separately listed mobile-phone unit, shed 4.4 percent.

The Nordic region's two major telecom equipment makers also saw their shares droop: Nokia of Finland was down 6.2 percent, and Sweden's Ericsson fell 1.9 percent.�

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Amsterdam's AEX index fell 1.4 percent and Milan's MIB30 index was down 1.9 percent, while the SMI in Zurich was 0.8 percent lower.

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 1.5 percent, with its automobile sub-index down 5.1 percent and the information technology sector dropping 3.5 percent.

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