Shares in DaimlerChrysler picked up from an intraday low for the year but still closed 3.4 per cent down on the day, after a crisis supervisory board meeting confirmed sweeping management changes at Chrysler and warned that US earnings would be lower than expected.
The Stuttgart-based motor manufacturer said it was despatching a team of executives from Germany to take over management at Chrysler. It will be led by Mr Dieter Zetsche, from the commercial vehicles business, who will replace Mr James Holden as chairman at Chrysler. Earlier, Deutsche Bank, the motor group's largest shareholder with a 12 per cent stake, said it was unhappy with the current share price.
DaimlerChrysler shares closed at €50, having picked up from an early €48.80. Nicholas Potter at Gilissen Securities, part of Fortis Group, said Mr Zetsche would arrived in his new job with a strong reputation.
Quarterly index changes by Morgan Stanley Capital International made for lively trade in some of the newcomers and in stocks that are disappearing from the benchmarks. However, one of the day's biggest losers was Richemont, the Swiss-based luxury goods group, partly on disappointment that it had been excluded from the index. The shares tumbled 6.2 per cent to SFr5,010, wiping out all a sharp rise the previous session as expectations grew for first half profits due on Monday.
Technology companies sold off sharply. The sector came under pressure from a US downgrade on Sun Microsystems, maker of Internet servers. In Europe, Alcatel led tech stocks downwards, falling more than 7 per cent to €62.50. The effects of the previous day's comments from US group Applied Materials, the world's leading chip equipment maker, continued to depress chip stocks. STMicroelectronics and ASM Lithography both fell more than 4 per cent.
Telecoms were down again, with France Telecom off more than 4 per cent at €108.10 and Deutsche Telekom off 2.8 per cent to €39.12. The Dutch cable company UPC fell 8.5 per cent to a 19-month low of €14 as the market continued to react to its disappointing third-quarter results.
Internet stocks were mostly lower. Spain's Terra Lycos was down more than 12 per cent to €19 compared with its March peak of €157. Its parent group, Telefonica, was also weak, which helped pull the Madrid Ibex below 10,000, closing at 9,845.9. Telepizza was another prominent Spanish casualty, losing 10.5 per cent to a new low of €2.90. The big exception was the UK's Freeserve which jumped almost 9 per cent, adding to its 11 per cent gain of the day.
