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New lows for European markets
LONDON, England (CNN) -- Europe's top stocks slumped to deeper six-year lows on Wednesday as investors continued to worry about moves to war in Iraq. London's FTSE and Frankfurt's blue-chip DAX were among the hardest hit, both dropping by more than four percent. The UK benchmark index fell almost five percent in one of its biggest percentage drops in the history of the index. "There's one word for it -- carnage. It's horrible," Richard Wright, head of CFD at brokerage GNI in London, told Reuters. "Nobody has any confidence. Nobody wants to buy anything and if they do buy anything they're wrong within about 10 minutes. It's fairly gloomy," said Wright. French utility Suez (PLY) topped the blue-chip loser-board on concerns it may be facing a cash crunch, while German drugs and chemical firm Bayer tumbled after it announced it was being sued over alleged securities violations. London's FTSE 100 closed 4.80 percent down at 3287.00, the Paris CAC 40 ended down 3.62 at 2403.04 and the Swiss SMI closed down 1.51 percent at 3675.40. Frankfurt's electronically traded Xetra Dax closed down 4.44 percent or 102.34 points at 2202.96. Traders blamed the dire mood on uncertainty about Iraq, withering confidence in the corporate sector and a sluggish world economy -- a list of woes that has tugged the FTSE Eurotop 300 index down 20 percent so far this year. By 1703 GMT, with only Frankfurt still trading, the Eurotop 300 index was down 3.5 percent at 682.40 -- a fresh six-year low -- as losers eclipsed gainers by six-to-one. Volume was above average at 3.2 billion shares. The narrower DJ Euro Stoxx 50 index sank 4.4 percent to 1,849.46 points. There was one brief moment of optimism with rumors, quickly denied by U.S. government officials, that Al Qaeda leader Osama bin Laden had been captured. But the main focus remained on how the world's major powers will resolve the impasse on how to disarm Iraq. "It increasingly seems that the U.S. is going to go it alone, which is the least desirable outcome," said Rupert Thompson, global strategist at independent brokerage E+Trade. Telecom Italia was among a handful of blue-chip companies that lost more than 10 percent of their value on Wednesday. The stock plunged 11.4 percent after the firm announced a plan to merge with Olivetti, which rose 3.3 percent. The planned merger, which would shorten the complex chain of control over Italy's dominant telecoms operator, was met with anger by investors. Dresdner Kleinwort Wasserstein cut its recommendation on Telecom Italia, saying the terms of the deal were "grossly unfair" to minority shareholders. Ratings agency Moody's said it may downgrade the debt ratings of both companies, citing an increased debt burden. Suez dropped 13.6 percent on concerns it could be facing a cash crunch after a newspaper report that the utility group could sell its stake in TV channel M6 to whittle down its debt. Heavy engineering firm Alstom (PALS) plummeted 50 percent after it said it would sell off key businesses and issue new stock, renewing fears of a cash crisis at the firm. (Full story) "These companies are selling assets at very poor levels because they have no choice," said Nigel Cobby, managing director of European equities at J.P. Morgan in London. Canary Wharf Group (CWG), which owns Britain's tallest building, fell 22 percent to 180 pence in London. The company warned that the political and economic crisis was deterring tenants, leading to vacant space at its office complex in east London. Financial news and data provider Reuters fell 12 percent, below the psychological support level of one pound, to around 17-year lows on concerns about its outlook, dividend and the tough competition it faces. Elsewhere, Germany's Bayer was again on the ropes, tumbling 8.7 percent after it said it was being sued in a New York district court on allegations of violations of the Securities Exchange Act. The stock has already lost two-fifths of its value since the start of the year on fears that liabilities from cholesterol drug Baycol could spiral to between five and 10 billion euros. Technology leader Nokia was one of a handful of gainers as analysts upgraded the stock, saying it looked cheap after a battering following its earnings warning on Tuesday. Nokia had said it expected weaker sales and profits in the first quarter due to poor demand for its network equipment. The stock rose 3.8 percent. Another gainer was Danish wind turbine maker Vestas, up 52 percent, after it posted above-forecast 2002 profits and repeated its 2003 outlook -- confounding expectations for it to present a more pessimistic outlook.
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