Europe ends mostly in red

October 12, 2001 Posted: 1921 GMT

NEW YORK (CNNmoney) -- Europe's major bourses closed mostly in the minus column Friday after Cap Gemini warned the Sept. 11 terror attack has damaged revenue and growth.

Cap Gemini Ernst & Young, Europe's biggest computer services company, plans to axe 600 jobs after the attacks caused "significant losses in revenue" and pushed back the company's recovery.

Shares of Cap Gemini fell 2.34 percent on the Paris bourse.

"I think from here will get a further bounce as the market is still oversold, there is cash around, and people will be squeezed back in," said Mark Pignatelli, a European equities fund manager at Schroders.

"We could probably go up another 10 to 15 percent over the next week or so, but we have to see if there is follow-through after that," Pignatelli said.

France's Carrefour powered retailers higher, but Britain's CGNU pulled insurers down, while Deutsche Telekom and Vodafone Group led a telecom retreat.

Numbers from the U.S. painted a muddied picture of the U.S. consumer, lynchpin of the world's biggest economy, but investors were cautious about going out on a limb ahead of the weekend as U.S.-led bombing of Afghanistan continued.

The U.S. Federal Bureau of Investigation warned there could be more attacks on U.S. interest at home and abroad soon. Reports after Europe's close of an anthrax case in New York heightened fears of biological attacks, and sent Wall Street tumbling.

London's FTSE 100 fell 0.4 percent to 5,140.50, and the CAC 40 blue chip index in Paris rose 0.1 percent to reach 4,336.88.

The German DAX slumped 2.3 percent in early evening trade as reports of the anthrax case broke.

The Eurotop 300 index of pan-European blue chips was off 0.57 percent at 1,182 points.

It has risen 15 percent since it hit a three-year low Sept. 21 after heavy selling in the wake of the attacks on New York and Washington that left some 5,500 people dead.

Although the Eurotop 300 is back to where it was just before the attacks, it still is only at early 1999 levels and down 25 percent for 2001.

"Once we get the hyperventilation out of our system, we will then drift a bit and have another go on the upside," said Robert Kerr, European strategist at Bank of America.

"Next week we have a raft of earnings in the tech sector, with STM, Philips and Nokia. We have got to see evidence that if the bad news is not turning into good news, then at least the bad news is slowing," Kerr said.

As European bourses shut, New York was weaker, with the Dow Jones industrial average off 1 percent at 9,314 while the Nasdaq Composite had shed 0.5 percent to 1,692.

The Euro Stoxx 50 index of euro zone blue chips shed 0.3 percent to 3,499 points.

The retail sector was boosted by a 4.5 percent rise in Europe's biggest supermarket group, Carrefour of France, after it posted below-expectation third-quarter sales but stuck to its full year sales growth target.

Britain's CGNU fell 4.5 percent to lead European insurers lower after Dresdner Kleinwort Wasserstein cut its rating on the UK life assurance sector to "neutral" from "overweight," saying there was little upside left.

Media also felt a chill as French station TF1 dropped 8.8 percent following a downgrade by Merrill Lynch on valuation grounds and negative ad sales growth estimates.

Chemicals were lifted by a 13.5 rise in Rhodia on continued talk that Germany's BASF AG was lining up to bid for the struggling French chemicals group. BASF shares advanced 0.9 percent.

More gains in Germany's Bayer, up 1.6 percent, lent further strength to the chemical sector.

The firm's stock has rallied this week because it produces the drug Cipro, the only U.S. government approved anthrax treatment, sales of which have been spurred by fears of a biological attack. Three Florida people have been exposed to anthrax.

The telecom sector's strong gains of the past few weeks fizzled, with Deutsche Telekom down 3.3 percent, and Vodafone Group off 3.2 percent. Dealers said there was nervousness that the sector had risen too far and too fast.

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