The gloom surrounding Daimler-Chrysler deepened as the German motor giant's plans for a dramatic US restructuring, announced roughly one month ahead of schedule, looked to fall short of brokers' expectations.
"The're swinging the axe, but are they swinging it hard enough and fast enough?" was one comment that summed up the mood of the market. Adam Collins at Schroder Salomon Smith Barney said these figures "flatter to deceive". A 20 per cent cut in workforce numbers and a 15 per cent reduction in output over three years was widely seen as possibly too little.
The shares, a strong market over the past six weeks, shed 2.3 per cent at 51.30 in 4.4 million traded as WestLB Panmure downgraded the European car sector to "underperform" from "neutral".
Peugeot lost 2.7 per cent at 271 amid worries over car recalls. Truckmaker Volvo finished off 1.00 Swedish krona at SKr176 ahead of Thursday's results statement.
Speculation that it was to pull out of the bidding for the next generation of French mobile phone licences sent Bouygues steeply lower.
Suez Lyonnaise des Eaux and Telefonica dropped out last week amid deepened cost effectiveness concerns and the rumour mill yesterday was convinced that Bouygues' telecoms offshoot was set to follow suit. The shares fell to €53.40 before closing at €54.90.
Of handset groups, Ericsson edged up SKr1.00 at SKr106 against a backdrop of mixed emotions among brokers following last week's weak results statement and a decision to outsource handset production.
Several brokers downgraded the stock, including Goldman Sachs, which reduced its target price to SKr135 and cut earnings forecasts for 2001 by more than 30 per cent on "one fundamental worry, namely that Ericsson has decided to massively accelerate investments for third generation roll-out".
