European equities could re-test three-and-a-half year lows this week as investors, unnerved by the latest round of accounting scandals on Wall Street, remain shy of the market.
The announcement on Friday that US office equipment company Xerox expects to restate revenues by about $2 billion over a five-year period rattled investors still coming to terms with telecoms giant WorldCom's $4 billion accounting scandal.
"After Enron, WorldCom and Xerox, people are asking, 'Who's next?' and are wondering when we'll get scandals like these in Europe, because we are bound to see such things emerging in Europe at one point or the other," one market strategist said.
Over the weekend, US President George Bush called for rules and laws to "restore faith in the integrity of American business" in the wake of the scandals.
Nagging corporate debt fears, elusive earnings prospects, export-hurting euro strength and also a lack of support from Wall Street - closed for the July 4th holiday - could force markets to quickly erase last week's late rebound.
In Dublin, close attention will be paid to the IPO market ahead of the July 10th flotation of drink and snacks group C&C.
British DIY retailer, Focus Wickes, is due to price its shares today while Yell, the telephone directories business sold by BT last year, is expected to price its shares later in the week.
C&C has said it will press ahead with its flotation despite the recent market turbulence.
However, Goodbody Stockbrokers said yesterday that the current volatility could provide retail investors with an opportunity to purchase C&C shares at a discounted price. In a note to private clients, the broker said the stock looked competitively valued at the lower end of the indicative price range of €2.60 to €3.60, while also offering a potential dividend yield of 3.5 per cent per annum.
Beleaguered pharmaceutical group Elan, which is expected to publish its annual report today, will also prove another focus for the domestic market. Analysts said they would be looking to the report for a better breakdown of the company's performance.
