Growing uncertainty about the outlook for interest rates ahead of today's US federal open market committee meeting sent European financials lower, and virtually all the Continent's bourses followed suit. The FTSE Eurobloc 100 index, which covers leading companies in the euro zone, closed 1.8 per cent lower at 1,035.73. The FTSE Eurotop 100, covering countries inside and outside the zone, fell 2.1 per cent to 2,884.75, while the broader FTSE Eurotop 300 settled 1.9 per cent lower at 1,257.33.
Zurich saw sharp losses in rate-sensitive banks and insurers, and the SMI index closed with a loss of 160.2 or 2.3 per cent at 6,910.9.
CS Group lost 10 Swiss francs to SFr262 and UBS was SFr16.50 lower at SFr473. Among the insurers, Swiss Re fell SFr105 to SFr3,000 and Zurich Allied lost SFr37 to SFr873. Novartis pulled SFr39 back to SFr2,185 as the company said its Ciba Vision eyecare division would acquire Mentor Corp's lens-implant business for around #38 million.
Frankfurt tracked Wall Street lower in late trading, losing 81.49 at 5,102.00 on the Xetra Dax index. The trend, emphatically on the downside, was highlighted by steep falls for Siemens and Deutsche Bank in spite of upbeat trading statements from both heavyweight companies.
Siemens lost #1.65 at #69.95, while in a banking sector made weak by worries about a possible US led upturn for interest rates Deutsche Bank gave up 44 cents at #53. Deutsche Telekom shed 94 cents at #34.21 ahead of today's first-quarter results statement. Mannesmann, which puts out quarterly results on Thursday, shed #1.28 at #117.42. News that its market share in Europe had improved to #12.2 cut no ice for Volkswagen, which came off #1.80 at #62.20.
Rare firm features included BMW, up #3.15 at #673.05, and Hoechst, which responded to the news of renegotiated merger terms with Rhone-Poulenc of France with a #1 gain to #41.
Amsterdam faced markdowns among leading shares and ended with the AEX index off 8.31 at 543.84 after a session of stubbornly modest trading volumes. Philips fell #1.40 at #85.20 and Royal Dutch lost #1.35 at #52.60. The heavyweight financials also fell foul of the sellers, with ABN Amro shedding 40 cents at #20.75. Heineken came off 40 cents #51.20 after Morgan Stanley Dean Witter downgraded the stock from "strong buy" to "outperform" and trimmed its target price to #55.
Paris closed just above lows as it fell in line with other European markets. The CAC-40 index ended 74.89 or 1.7 per cent down at 4,248.94 after trading between 4,280.04 and 4,243.22. Defence shares were among the handful of stocks to prosper. Thomson-CSF posted the day's second biggest gain, climbing 50 cents or 1.7 per cent to #30.30, while Lagardere managed the third biggest rise, ending 49 cents or 1.2 per cent higher at #40.
