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Heavy Day for Job Losses in Europe

Aired October 19, 2001 - 04:46   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SHIHAB RATTANSI, CNN ANCHOR: And now on to the financial market update with Becky Anderson -- Becky.

BECKY ANDERSON, CNN CORRESPONDENT: Shihab, thank you.

First, news that German business confidence has crumbled in September. The closely watched EFO survey shows a huge decline in the confidence index. It's at its lowest for eight years and fell far more than expected. That compounds fears that Europe's largest economy is suffering a major slowdown. Frankfurt's benchmark DAX share index has lost about 29 percent this year. And yesterday, Finance Minister Hans Eichel (ph) halved his growth forecasts for the German economy.

Well those figures have knocked Europe's markets for six today after a fairly positive start. Investors also holding out today for third quarter figures from the Finish mobile phone operator Nokia. Well they may add even more volatility to the tech sector than we've seen in recent days.

(BEGIN VIDEO CLIP)

MARK CLIFFE, ING BARINGS: While some people are focused on the immediate damage to activity from the terrorist attacks, others are concentrating on the longer-run outlook which is, of course, determined by these policy responses that we've been seeing. So there's a big sort of two-way flow of ideas and indeed transactions and a lot of sector rotation in the stock market right now.

(END VIDEO CLIP)

ANDERSON: OK, let's take a look at the numbers. London's FT 100 down 1.75 percent. We've got the Frankfurt DAX down 1.5 percent, the CAC 40 in Paris down about the same and Zurich's SMI is just slightly in the red.

Well it's a heavy day for job losses so far in Europe, 5,000 jobs are set to go at the arrow engine maker Rolls Royce, most of them in the U.K. That's just under one-fifth of its entire work force. Rolls says the slump in air travel will knock its underlying profits by half in 2002 though it is sticking to its earnings targets for this year. It's also planning to cut output across the group.

And Dutch-based data network provider KPNQwest has said it's cutting as many as 30 percent of its enlarged work force. That's as a result of its purchase of European businesses from Global TeleSystems of the U.S. That could mean up to 1,200 job losses at -- out of a staff of 4,000. The deal will -- with Global TeleSystems cost KPNQwest $518 million.

The world's largest food maker Nestle has disappointed analysts with third quarter sales figures. Revenue rising almost 5 percent, though, that's below the market estimates. Still, the Swiss company says it is on track to increase sales and profits for the full year.

Well there are more important figures on the way for investors today from the U.S. Later, consumer price inflation figures for September, they are expected to rise, and U.S. trade deficit numbers for August. Those will both give markets a suggestion of where the U.S. economy is headed in the months to come.

To the main corporate story in Asia, electronics heavyweight Hitachi says it's cutting over 3,000 jobs at its semiconductor division. That's part of a wider cost-cutting effort at the Japanese company. Hitachi aiming to knock 25 percent off costs at its chip unit by next March. Hitachi bracing itself for a $1 billion loss this year as a result of the info-tech slump.

That's it from the financial news desk in London. I'm Becky Anderson.

Shihab, back to you at CNN Center.

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