Europe's Dow Jones Stoxx 50 and 600 indexes fell for the first week in the last four as companies such as Volkswagen AG and Schneider Electric SA said the dollar's drop may crimp sales or profit this year.
TUI AG and LVMH Moet Hennessy Louis Vuitton SA slid on concern severe acute respiratory syndrome will deter tourists from booking holidays and buying luxury goods.
The Dow Jones Stoxx 50 Index fell 1.4 percent to 2,289.97, taking its drop to 1.4 percent for the week. It slid Thursday and Friday after reaching a three-month high on Wednesday. The Stoxx 600 lost 1.1 percent for the week.
"We think the current rally is close to petering out," said Andreas Utermann, who helps manage about US$700 billion at Allianz Dresdner Asset Management. He said he may start selling stocks, partly because the US and European economies are "not firing on all cylinders." Both the US and UK economies expanded less than economists expected in the first quarter, reports showed Friday.
The Organization for Economic Cooperation and Development cut its forecast for 2003 global economic growth on Thursday.
Benchmark indexes fell in all of the 16 Western European markets open for trading Friday except Portugal. Greece's stock exchange was closed for a national holiday. All 17 markets were closed Monday for Easter.
Germany's DAX Index has fallen 2.1 percent in the past four sessions. France's CAC 40 Index has slipped 1.1 percent and the UK's FTSE 100 Index has lost 0.5 percent.
Reports from companies such as Volkswagen AG during the week highlighted how the weaker dollar is affecting profit. Volkswagen, Europe's largest carmaker, blamed the dollar on Thursday when it said operating profit will fall for the second straight year this year. The stock lost 10 percent in the past two days.
Schneider Electric, the world's largest maker of circuit breakers, has slipped 4 percent since saying Wednesday that the current exchange rate would make it "extremely difficult" to cut costs enough to meet its 2004 profit target.
The dollar has lost 19 percent against the euro in the past 12 months. Every 10 percent drop in the dollar cuts European company earnings by 4 percent on average, according to research from Goldman, Sachs & Co.
DaimlerChrysler AG, the fifth-largest carmaker, Michelin & Cie, Europe's biggest tiremaker, and other exporters also said the declining dollar is reducing earnings.
Royal Philips Electronics NV, Europe's largest consumer electronics maker, fell 6.1 percent this week. The company reported a 14 percent decline in sales. Sales would have risen 5 percent without currency effects, it said. Philips generates almost one-third of its revenue in the US.
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