Widespread market rumours that pan-European cable company UPC might default on a €4 billion loan sent the stock plunging almost 24 per cent to its low for the year. By the close in Amsterdam the shares were quoted at €10.65, a shadow of their €77-a-share high in late March.
Dealers said the market was alive with rumours that UPC, which has been pursuing an aggressive expansion policy, would default on the loan once its shares reached €7.90.
Some stories suggested that the cable TV operator had already defaulted on one covenant.
Traders pointed out that UPC was already heavily indebted and shareholders were running for cover at the prospect they would be asked to find fresh cash.
A banker at Chase Manhattan, one of the company's bankers, said late yesterday: "As far as we're aware, there is no default or risk of a default on any of UPC's debt."'
Deutsche Post, the biggest European IPO of the year, overcame a nervous start to end at a premium on a day of high-powered trading volumes.
Some 40 million shares changed hands as the stock climbed steadily back from early lows of €20.93 to €21.60, against a flotation price said to have been pitched on the high side at €21.
Telecoms shares ran into a renewed wave of selling as investors digested a complex deal from France Telecom and the final leg of KPN's big share issue amid talk of sector downgrades.
The heavyweights in the sector all streamed lower. France Telecom, which is taking control of Equant and pumping $1 billion into the network service provider, came off 4.1 per cent at €103.7. Deutsche Telecom lost 2.9 per cent at €38.15, Telefonica 2.4 per cent at €20 and KPN 8.2 per cent at €16.
Among telecoms equipment groups, Alcatel tumbled 8.3 per cent to €57.30 following a broker downgrade for a number of US network supplier groups.
In the banking sector, Spain's Banco Santander Central Hispano dropped 6.9 per cent to €10.45 with investors concerned that it had bid $3.6 billion - more than three times as much as its closest local rival - to win a controlling stake in Brazil's Banespa, the country's number three banking business and one of its most treasured national institutions.
