European exporters such as Bayerische Motoren Werke AG and Electrolux AB may lead the Dow Jones Stoxx 600 Index to a third week of losses.
The euro climbed this week to its highest in almost three years against the dollar, and the advance may crimp profit at companies dependent on sales in the US, the largest export market for the region.
The Stoxx 600 shed 3.6 percent for the week, as did the Dow Jones Stoxx 50 Index, as some companies scaled back profit forecasts for 2003. The European Central Bank on Thursday lowered its forecast for next year's economic growth in the euro region to as little as 1.1 percent.
"A rising euro isn't good news, taken in combination with the gloomy economic outlook we have," said Davina Curling, who manages 1 billion euro (US$1.6 billion) of European equities at Isis Asset Management in London. Further gains by the European currency would "definitely set back export earnings."
Oil prices may also be a concern, as they neared an eight- week high. Rising energy costs have the potential to reduce profits at companies such as EasyJet Plc, Europe's largest discount airline, and also curtail economic growth.
Europe's single currency Friday bought as much as US$1.0257, the most since January 2000. A lower dollar cuts the value of earnings from European companies' US businesses and makes products less competitive there.
BMW, the second-largest luxury carmaker, and Electrolux, the biggest maker of household appliances, are among exporters whose earnings may suffer from a weakening dollar, according to Credit Suisse First Boston. The firm also named Invensys Plc, a UK factory-controls maker, as a possibility.
About 40 percent of BMW's profit before interest and taxes comes from the US, according to Credit Suisse.
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