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Europe sinks as car stocks skid
LONDON, England -- European shares sank on Wednesday afternoon with car stocks skidding on a glum industry outlook from France's Renault, but hopes that payouts on asbestos lawsuits would be capped helped construction firms. London's FTSE 100 was down 1.45 percent to 3,616.1, Frankfurt's electronically traded Xetra Dax, trading until 1900 GMT, fell 1.38 percent and the CAC 40 blue chip index in Paris lost 2.5 percent to 2,770.62. The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 1.73 percent. "Worries about a possible terrorist attack, tensions over Iraq and the weak European economy are pushing markets lower," Edwin Slaghekke, a European fund manager at Theodoor Gilissen Bankiers, told Reuters. Insurers were also weak as credit rating agency Standard & Poor's cut its ratings on the debt of France's Axa because of lower earnings growth last year and diminished capital, sending its shares sliding 4.2 percent to 10.65 euros.
The auto sector slid more than three percent after Renault said it was banking on a two percent dip in the western European market in 2003, but cautioned it could skid as much as six or seven percent in a worst case scenario of war in Iraq and ongoing economic gloom. Renault shares fell 6.6 percent to 38.88 euros, while rival Volkswagen dropped 4.5 percent to 35.84 euros. The construction sector bucked the downward trend to gain on the back of UK building materials group Hanson whose shares rose four percent to 285.6 pence after a U.S. legal body endorsed a plan to place limits on asbestos claims. French peer Saint-Gobain which is also exposed to asbestos lawsuits in the United States, rose 2.6 percent to 28.54 euros. Europe's food and beverage sector was under pressure after British confectionary and soft drinks group Cadbury Schweppes warned of flat 2003 earnings at its U.S. soft drinks unit DPSU. Cadbury shares fell five percent to 317-3/4 pence. Elsewhere in the sector, UK drinks giant Diageo sank 4.2 percent to 584 pence despite WestLB Panmure bank raising its recommendation on the stock to "buy" from "neutral" in the run-up to half-year results due next week. Drinks group Allied Domecq shed 4.4 percent to 293-1/2 pence. In the retail sector, shares in Britain's biggest electronics retailer Dixons slid 6.2 percent to 93-3/4 pence, their lowest level in over seven years, after dealers said concerns over trading conditions had resurfaced following a presentation to analysts. The AEX index in Amsterdam was down 3.18 percent, Milan's MIB30 index fell 0.94 percent and the SMI in Zurich declined 2.4 percent. In the U.S. rising geopolitical tensions, most recently aided by a taped message purportedly by terrorist leader Osama bin Laden, continued to corrode stocks in morning trading on Wednesday. Shortly after 11:30 a.m. ET, the Dow Jones industrial average (down 40.24 to 7802.87), the Nasdaq composite (down 3.32 to 1292.14) and the S&P 500 index (down 4.17 to 825.03) all traded in the red.
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