Chips send Europe lower

January 16, 2002 Posted: 1722 GMT

LONDON (CNN) -- European markets ended lower on Wednesday, led by tech stocks after two of the world's biggest chipmakers said they would slash spending.

Wall Street was also lower in early trading after U.S. giant Intel posted fourth-quarter operating profit late on Tuesday that beat estimates but provided a less-than-stellar 2002 growth forecast and substantially cut its capital spending plans for the year. South Korean chipmaker Samsung Electronics followed with an announcement that it was also slashing capital spending for 2002. 

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London's FTSE 100 closed down 0.7 percent to 5,127.6 and the CAC 40 blue chip index in Paris lost 2.1 percent to 4,425.5, while Frankfurt's electronically traded Xetra Dax was down 1.4 percent to 4,990.21 in late trading, with the Frankfurt exchange set to close at 1700 GMT.

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, fell 1.1 percent, with the electronic and electrical, and IT sectors leading the decline.

ASML, Europe's biggest supplier of chipmaking equipment, dropped 6.9 percent in Amsterdam. STMicroelectronics (PSTM) , Europe's biggest chipmaker, fell 4.6 percent and rival Infineon Technologies (FIFX) was down 3.3 percent, off its lows, in late Frankfurt trading.

UK software maker Logica (LOG), plunged 6.2 percent, while engineering company Invensys (ISYS) fell 6 percent.

ARM Holdings (ARM), Europe's biggest chip designer, lost 5.2 percent in London and Philips Electronics, Europe's third biggest chip maker, lost 4.1 percent in Amsterdam.

Sweden's Ericsson, the biggest supplier of third generation wireless infrastructure, dipped 2.9 percent in Stockholm. Finland's Nokia, the world's biggest mobile phone company, slid 1.9 percent.

Alcatel (PCGE), France's biggest phone equipment maker, declined 5.7 percent. German electronic components maker Epcos [FSE:EPCGn] dropped 5.5 percent, pushed lower by a downgrade from ABN Amro, while   Germany's biggest communications equipment maker Siemens (FSIE) was down 4.4 percent in late trading.

Auto stocks slid as General Motors (GM: down $0.02 to $49.94, Research, Estimates) , the world's biggest, reported sharply lower fourth-quarter

profits as zero-percent financing deals cut into its bottom line in a slowing economy.

Europe's biggest automaker Volkswagen (FVOW) lost 2.4 percent in Frankfurt. BMW (FBMW), the German luxury automaker, was down 2.2 percent in late trading, while the world's third-largest automaker by sales DaimlerChrysler (FDCX) slipped 0.1 percent, off its lows, and

Fiat, Europe's fifth-largest automaker, declined 1.6 percent in Milan.

Britain's Marks and Spencer (MKS) said same store, outlets open for at least 12 months, sales rose 8.3 percent over the Christmas period but warned growth could not be maintained. Its stock ended down 0.1 percent after posting early gains.

UK utilities group Lattice (LAT) was the top gainer in London, jumping 3 percent after it announced a change in it financial year and accounting method. The company's results for the full year to December 31 are due on February 7.

Prudential (PRU), Britain's second-largest life insurer, climbed 2.1 percent. The insurer said worldwide insurance sales surged 46 percent surge to £2.8 billion ($4 billion) in 2001, powered by strong growth in Britain and Asia.

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In Amsterdam, the AEX index lost 1 percent and Milan's MIB30 index fell 1.3 percent, while the SMI in Zurich slipped 0.9 percent.

In the U.S., Wall Street was lower in early trading on Wednesday as the global market fallout continued after chip making giants Intel of the U.S. and Samsung of South Korea said they were slashing capital spending. Also, markets got little direction from U.S. inflation numbers for December, which were slightly lower than expectations.

Intel's results come during a week when some of the biggest U.S. companies, like bellwether IBM (IBM: down $1.05 to $117.80, Research, Estimates) and Microsoft (MSFT: down $1.15 to $68.40, Research, Estimates), report fourth-quarter earnings

The Nasdaq composite index was down 1.3 percent at 1,974.63, while the Dow Jones industrial average fell 1 percent to 9,828.8.