Telecoms tumbled to the bottom of the FTSE 300 performance tables following the forecast of slowing revenue and earnings from WorldCom, the US long-distance operator.
The statement from the US leader, which forecasts final-quarter earnings of 34-37 cents a share and cut its marker for 2001 to $1.60, came like a bolt from the blue for European analysts. Arguably one of the more bullish houses, ABN Amro had 49 cents pencilled in for the final period of 2000 and $2.05 for next year.
Given the recent relative strength of the sector and the proximity of next week's figures from British Telecommunications, all the top shares moved steeply lower. Deutsche Telekom fell €1.25 at €43 and France Telecom €1.20 at €122. KPN and Sonera shed €1.03 at €22.84 and 41 cents at €25.55 respectively. Telecom Italia shed 82 cents at €13.54. Telecoms equipment producer Alcatel stayed volatile as the two-way tussle in the stock was played out for the second session running, with opinions among top brokers showing distinct signs of polarisation. Goldman Sachs cut its target price in the stock from €110 to €85 and chopped back next year's profits forecasts by 7.5 per cent. Credit Suisse First Boston also reduced earnings estimates for 2001. By the finish, Alcatel was off 20 cents at €71.70 having traded between €74.75 and €69.95. Volume was again very robust at 8.7 million shares.
On a busy day for the financial sector, Italy's Generali, Europe's third largest insurer, put on 2.9 per cent to €39.90 as Morgan Stanley Dean Witter raised its price target from €40 to €46 and reiterated an outperform rating on the stock.
Deutsche Bank failed to make progress in spite of a 139 per cent rise in net profits for the first nine months, marginally above expectations. After an early high of €98.20, the shares slipped back to close 0.2 per cent easier at €96.30. Dresdner Bank, reporting nine-month figures today, dropped 1.1 per cent to 48.
In the high-tech sector, United Pan-Europe Communications (UPC), Europe's largest cable network, jumped 8.5 per cent to €22.40 as JP Morgan began coverage. UPC was given a buy recommendation and a price target of €33.
Germany's United Internet soared 18.1 per cent to €8.95 on media reports and speculation that it could be a takeover target for T-Online, Europe's largest Internet service provider.
