European markets end lower

February 12, 2002 Posted: 1809 GMT

LONDON (CNN) -- European markets ended lower on Tuesday, after negative news from Nortel Networks rattled investors on both sides of the Atlantic.

Canadian telecom equipment maker Nortel Networks, which said it expects revenue to decline in the first quarter, also announced its chief financial officer had resigned after buying an selling Nortel stock in violation of company policy.

The resignation raised new concerns over corporate transparency and  accounting practices, initially sparked by the collapse of U.S. energy giant Enron. It also added to the market jitters caused by the bankruptcy of U.S. telecom operator Global Crossing and the alleged fraud at the U.S. branch of Allied Irish Banks.     

Telecoms also came under pressure on Tuesday after Carrier1 (CONE) said it was filing for insolvency. The European telecoms group, which is managed out of London and Switzerland and is listed in Frankfurt, plunged 51.2 percent in late trading.

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London's FTSE 100 closed down 0.5 percent to 5,135.7 and the CAC 40 blue chip index in Paris slipped 0.4 percent to 4,337.95, while Frankfurt's electronically traded Xetra Dax was down 1.5 percent to 4,863.98 in late trading (the German market closes at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, fell 0.2 percent, with the media and insurance sectors also declining along with telecoms stocks.

UK telecoms giant Cable & Wireless (CW) fell 8.6 percent, while France Telecom (PFTE) was down 2.6 percent and Deutsche Telekom (DTEG) lost 2.4 percent.

Vodafone (VOD), the world's largest mobile phone operator, slid 3.7 percent, while French mobile phone operator Orange (ORA) fell 4.9 percent.

UK information technology company Guardian iT (GRD) plunged 41.9 percent after revealing accounting discrepancies of as much as $3.6 million, prompting its chairman to offer his resignation.  

Meanwhile, BP (BP-), the world's third-largest publicly traded oil company, rose 0.7 percent after it said fourth-quarter profit fell 46 percent due to a slowing global economy and falling energy prices.

French consumer electronics group Thomson Multimedia dropped 9 percent and was the biggest faller among the FTSE Eurotop index's 300 constituents, after the French finance ministry said it planned to sell part of its 37-percent stake in the French consumer electronics group.

Thomson also posted full-year results below expectations and said it planned to go to the market shortly to raise capital to fund its development.

The world's biggest financial news and information provider, Reuters Group (RTR), was one of the top losers in London, with its shares falling 6.8 percent after it reported a 34-percent fall in annual profit that was at the bottom end of expectations.

Reuters, which has been slow to feel the effects of a financial market slump, made clear hard times were now beginning to bite but said revenues would bottom out sometime in the second half.

E.ON slid 2 percent on fears that German insurance giant Allianz is bracing markets for a sizeable share placement in the German utility.

Among Europe's smaller markets, Amsterdam's AEX index rose 0.2 percent and Milan's MIB30 index fell 1.1 percent, while the SMI in Zurich was off 0.4 percent.

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In the U.S. on Tuesday, big losses in Nortel Networks and Cisco Systems sent the major indexes lower early Tuesday amid new worries about the business outlook for the two major communications equipment makers.

Nortel (NT: down $0.49 to $6.35, Research, Estimates) said it expects current-quarter sales to fall 10 percent from the last quarter a day after announcing the resignation of its chief financial officer amid questionable investment transactions.

And Cisco (CSCO: down $0.35 to $17.34, Research, Estimates) saw its share price target cut to $13 by Dresdner Kleinwort Wasserstein a week after the maker of computer networking gear forecast disappointing sales.

In midday trading, the Nasdaq composite index was down 21 points, or 1.1 percent, to 1,825, while the Dow Jones industrial average fell 47 points, or 0.5 percent, to 9,837.