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European markets off their lows

LONDON, England (CNN) -- European markets ended lower on Tuesday as early gains, led by British insurers, gave way to more concerns over corporate debt and accounting irregularities.

However, investors had little time to react to a call by President George W. Bush for a crackdown on U.S. corporate abuse, an issue that has sent jitters through markets on both sides of the Atlantic -- beginning with the Enron scandal and engulfing other companies like Global Crossing, WorldCom and Merck.

In a speech in New York, Bush said he wanted tougher criminal penalties for those convicted of corporate fraud and more power for federal securities regulators. The text of his speech was released at 1530 GMT, one hour before the end of trading on most European markets. (Full story)

The major markets ended off their lows, with London's FTSE 100 down 1.3 percent to 4,542.9 and the CAC 40 blue chip index in Paris lost 1 percent to 3,81901, while Frankfurt's electronically traded Xetra Dax was down 0.9 percent to 4,404.61 in late trading (the German market was set to close at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, fell 1.1 percent, with information technology, computer and life assurance sub-sectors leading the declines.

"We have the same issues impacting the markets [as in the U.S.], concern over corporate accountability, questions about the strength of the economic recovery and concern about the international environment," Joe Stocke, portfolio manager at StoneRidge Investment Partners, told Reuters.

"President Bush's speech should be viewed as positive; that he is taking action but we still are dependent on additional action by Congress to implement many of the items being discussed."

Technology stocks declined after another weak performance by Nasdaq. SAP (FSAP), Europe's biggest software maker, was down 3.6 percent in late Frankfurt trading, British rival Sage (SGE) lost 8 percent and Dassault Systemes (PDSY) of France dipped 1.9 percent.

Alcatel (PCGE), Europe's biggest telecom equipment maker, slid 2.2 percent after Moody's Investors Service cut its debt rating to "junk" status," while its German rival Siemens (FSIE) was down 4 percent in late Frankfurt trading.

France Telecom (PFTE) fell 4.7 percent, Europe's biggest mobile phone company Vodafone (VOD) slid 3.4 percent and No. 3 rival Orange (PORA) dropped 5.3 percent.

British insurers got an initial boost after a review of the country's saving industry suggested products should be simplified. Analysts said the government-backed review by the former chief executive of Lloyds of London Ron Sandler would bring in more business.

However stocks fell after UBS Warburg cut its price targets for three UK insurers -- Prudential, Legal & General and Friends Providence.

Prudential (PRU) closed down 3.7 percent, Legal & General (LGEN) lost 1.2 percent, and Friend Providence (FP) fell 2.6 percent. Aviva (AV), formerly known as CGNU, Britain's second-largest life assurer, was also affected by the target downgrade, with its shares falling 3.8 percent,

At the positive end of the market, Deutsche Telekom (FDTE), Europe's biggest phone company, was up 8.7 percent after the Financial Times said it may sell its IT unit T-Systems to trim its 67-billion euro debt pile, and on growing hopes that the group's embattled chief executive Ron Sommer might step down.

Irish drugs group Elan ended flat in Dublin after Chief Executive Donal Geaney resigned hours before he was expected to address investors about the firm's financial position. The company, which has seen its stock plunge about 95 percent amid accounting and debt concerns, said it has more than $1.3 billion in cash and that was enough to see it through a raft of changes. (Full story)

The AEX index in Amsterdam slipped 1.1 percent, while the MIB30 index in Milan lost 0.4 percent and the SMI in Zurich fell 0.6 percent.

In the U.S. on Tuesday, markets were little moved by Bush's speech on corporate fraud. Instead, investors biding their time with no major corporate news to react to, other than after a brokerage cutting estimates on chipmaker Intel.

At midday, the Nasdaq composite index fell 0.76 to 1,404.85, while the Dow Jones industrial average gained 10.59 to 9,285.49. The Standard & Poor's 500 index lost 3.16 to 973.82.


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