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Accounting jitters snag Europe
LONDON, England (CNN) -- European markets fell in mid-afternoon trading on Monday after Dutch retailer Ahold uncovered accounting irregularities at its U.S. food distribution business. London's FTSE 100 slipped 0.1 percent to 3,723.7 and the CAC 40 blue chip index in Paris lost 0.5 percent to 2,845.28, reversing earlier gains. Frankfurt's electronically traded Xetra Dax fell 1.3 percent to 2,613.16. The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 0.5 percent. Dutch supermarket group Ahold slumped 60 percent to 3.84 euros in Amsterdam after the company's chief executive and chief financial officer resigned following the discovery of accounting irregularities at its U.S. Foodservice unit. (Full story) "Ahold's accounting irregularities revive unpleasant memories. This is the main driver of the share price today as an investor just cannot trust the company's figures," John Hatherly, head of global analysis at M&G Asset Management, told Reuters. While Ahold's accounting problems raised unpleasant memories about the Enron and WorldCom scandals, some market watchers felt Ahold's problems were unique at this time. "My gut feeling is this is a company-specific issue at Ahold rather than a market issue," David Thwaites, a strategy at BNP Paribas, London, told Reuters. "Short-term, the market was up at the end of last week and it's a good excuse to take profits, especially with a U.N. resolution [on Iraq] coming." But shareholders in Ahold were not spared the rod, with the Netherlands' biggest bank ABN Amro sliding 2.8 percent to 14.56 euros, rival Fortis dropping 3.2 percent to 13.86 euros and financial group Aegon losing 6.1 percent to 10.61 euros. Frankfurt was pulled lower by Germany's biggest drug company Bayer (FBAY) after the New York Times said executives at the company knew of problems with its anti-cholesterol drug Baycol years before it was pulled of the market. Bayer fell 4.8 percent to 15.07 euros. The drug has been linked to the deaths of more than 100 people. Global political uncertainties also added to the gloom on the markets as U.N. chief arms inspector Hands Blix prepares to deliver a list of some 30 unresolved questions about Iraqi disarmament. At the same time, the United States and Britain are due to present a new resolution to the United Nations Security Council as early as Monday to force Iraq to disarm. (Full story) A vote on the new resolution was likely in mid-March, but France said it opposed a new resolution for now. The AEX index in Amsterdam fell 4.1 percent and the SMI in Zurich slipped 1 percent, while Milan's MIB30 index was little changed. In the U.S. on Friday, stocks managed to close higher for the second week in a row as investors bet that a U.S.-led military attack on Iraq is still a few weeks away. The Dow Jones industrial average, the S&P 500 index and the Nasdaq composite all gained around 1.3 percent. For the week, the Dow gained 1.4 percent, the S&P 500 index gained 1.6 percent, and the Nasdaq composite gained 3 percent. Wall Street was expected to open little changed on Monday. S&P 500 index futures climbed 0.6 points to 847.8 on the Globex trading system, while fair value, a measure that takes account of interest costs and dividend payments, was calculated at 847.51.
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