European stocks ease

December 19, 2001 Posted: 1722 GMT

LONDON (CNN) -- European shares eased for the second straight session on Wednesday with leading mobile phone maker Motorola announcing job cuts.

U.S. stocks had opened lower on perceived corporate weakness, embodied Motorola's announcement and a profit warning from Alcoa. But they were quickly thrown into flux by economic news from the government after the first hour of trading

"Motorola is not all that surprising and technology markets are going to remain difficult, with their recovery based on hope rather than reality," Jeremy Tigue, a fund manager at F&C Investment Trust in London, said of European markets.

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London's FTSE 100 fell 0.6 percent to 5,120.6 and the CAC 40 blue chip index in Paris slid 0.3 percent to 4,467.9, while Frankfurt's electronically traded Xetra Dax was down 0.6 percent to 5010.5.

The FTSE Eurotop 300 index of pan-European blue chips was down 0.7 percent lower at 1,219 points.

European shares are still down about 20 percent for the year despite a 25 percent bounce back since late-September.

Motorola, the world's second largest mobile phone maker, said late on Tuesday it was cutting 9,400 more jobs and warned of lower revenues in 2002 because of reduced spending by its telecommunications customers.

Among Europe's telecom equipment makers, Ericsson shed 4.3 percent, Nokia fell 2.4 percent, while Alcatel (CGEP) shed 1 percent.

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Technology companies were also lower, with Europe's biggest chipmaker ARM Holdings (ARM) down 5.5 percent in London and Germany's Infineon (FIFX), Europe's second largest chipmaker, down 2.4 percent.

European mining stocks fell after the world's largest aluminium producer Alcoa said it would not meet fourth quarter earnings estimates due to insolvent customers. French aluminium producer Pechiney fell 1.1 percent and British diversified miner Rio Tinto dropped 1.8 percent.

Meanwhile, the insurance sector was strong, as French insurance group Axa (PCS) rose 2.9 percent after stocks upgrades from Morgan Stanley and Schroder Saloman Smith Barney. The insurer slashed its 2001 profit outlook on Tuesday, but said per share earnings would rise by 20 percent on 2002.

Meanwhile, shares in Anglo-Dutch consumer products company Unilever rose 0.6 percent in Amsterdam after the group said it was on track to meet its target of low double-digit earnings growth for 2001.

In Amsterdam, the AEX index rose 0.1 percent and the SMI in Zurich was 1.2 percent lower, while Milan's MIB30 index was down 1 percent.

In the U.S., by midday the Dow Jones industrial average added 56.53 to 10,054.92, after being down more than 78 points earlier in the session. The Nasdaq composite index gained 2.21 to 2,006.97. The Standard & Poor's 500 added 9 to 1,151.92.