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Europe scrapes back into red

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LONDON, England (CNN) -- European bourses fell through the previous session's six-year lows as drug maker Bayer said it was impossible to forecast the cost of litigation over its recalled cholesterol drug.

London's FTSE 100 fell 1.2 percent to 3,577.2 and Frankfurt's electronically traded Xetra Dax lost 1 percent to 2,461.15, while the CAC 40 blue chip index in Paris dipped 0.5 percent to 2,607.17.

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 0.8 percent at 748.20 points, leaving it close to its worst close since January 1997.

"Companies have been prone to blame anything from Iraq, Enron and September 11 for their troubles but in reality it is the over-capacity of products and high debt levels that are chasing markets lower,'' Paul Casson, an investment manager at SVM Asset Management, told Reuters.

"Dividend cuts and accounting irregularities have also played their part,'' he added.

Bayer dropped 9.2 percent to 11.16 euros in Frankfurt. Reports have suggested Germany's biggest drug maker could face claims for damages of five to ten billion euros after its cholesterol drug Bayacol was linked to the deaths of 100 people.

And Dutch retailer Ahold slid 15.3 percent to 2.77 euros in Amsterdam as investigators on both sides of the Atlantic launch a probe into accounting irregularities. It stock has dived about 70 percent since it revealed loss in the U.S.

Insurance stocks were among the hardest hit after the world's second-largest reinsurer Swiss Re shocked investors with a 2002 loss of 100 million Swiss franc. Swiss Re dipped 6.4 percent to 71.90 euros.

Royal & Sun Alliance (RSA) slid 12.3 percent to 62.5 pence and France's Axa (PEX) declined 2.4 percent to 7.75 euros.

Abbey National (ANL), Britain's second biggest mortgage lender, fell 2 percent to 365.25 pence after posting its first-ever full-year pretax loss of 984 million and halving its dividend. (Full story)

"Abbey is a mess, the results are awful but it had been well trailed that they were going to be awful and the shares have been marked down on the run up," one trader told Reuters.

The AEX index in Amsterdam fell 1.2 percent and Milan's MIB30 index dipped 0.2 percent, while the SMI in Zurich declined 1.1 percent.

In the U.S. on Tuesday, stocks clawed their way back from big losses to end with small gains, despite worries about Iraq and North Korea and the weakest reading on consumer confidence in more than nine years.

The Dow Jones industrial average rose 0.6 percent, or 51.26 points, to 7909.50 and the Nasdaq composite climbed 0.5 percent, or 6.60 points, to 1328.98. The S&P 500 index added 0.7 percent, or 5.99 points, to 838.57.

Wall Street was expected to open lower later on Wednesday. S&P 500 index futures fell 4.1 points to 835.60 on the Globex trading system, while fair value, a measure that takes account of interest costs and dividend payments, was calculated at 837.78.

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