Sun, Jul 06, 2003 - Page 10 News List

European stocks poised for second week of declines

BLOOMBERG

European stocks are poised for a second week of declines on concern companies will struggle to lift profit as economic growth stagnates. Nokia Oyj, the world's largest mobile-phone maker, and Bayer AG paced the slide.

Royal Vendex KBB NV, the biggest Dutch department-store owner, slumped 14 percent today after predicting a loss at one of its businesses. MMO2 Plc dropped after Goldman, Sachs & Co lowered its recommendation for the mobile phone company, citing concern about increasing competition in Britain.

The Dow Jones Stoxx 50 Index dropped 9.03, or 0.4 percent, to 2392.25 at 5:58pm in London. It has lost 1.4 percent this week.

The Stoxx 600 fell 0.3 percent to 203.22. It is down 0.8 percent since last Friday, with the telecom group leading declines.

"We are going to have a sticky, difficult summer," said Gary Clarke, who manages US$1.34 billion at Gartmore Investment Management in London. "We will get some poor corporate news over the summer and mixed economic news from the US and Europe."

Orders to German factories, whose production accounts for about a fifth of Europe's largest economy, fell 2.2 percent from April, the Economy and Labor Ministry said today. Economists had forecast orders to be unchanged. The drop was the third in the past four months. An unexpected interest-rate cut in Sweden added to concern about the region's economy.

Eight of the 17 Western European benchmark indexes fell today. Germany's DAX declined 0.4 percent. The UK's FTSE 100 Index lost 0.1 percent. France's CAC 40 Index dropped 0.6 percent.

September futures on the Dow Jones Euro Stoxx 50 Index of companies based in the 12 countries sharing the euro were unchanged at 2413. The index slid 0.6 percent to 2406.95.

Sweden's OMX Index climbed 0.2 percent to 539.05. Sweden's Riksbank cut its benchmark interest rate a quarter point to 2.75 percent. Twelve of 17 economists surveyed by Bloomberg News expected the bank to leave rates unchanged at 3 percent, while five had forecast a quarter-point reduction. The index fell as much as 0.5 percent after the announcement.

Swedish growth will slow to 1.2 percent this year from 1.9 percent in 2002, the Riksbank said last month. In the euro zone, which excludes Sweden, the economy may grow zero to 0.4 percent in the second and third quarters, the European Commission has forecast. It didn't grow at all from January through March.

Reports Tuesday showed that European manufacturing shrank in June, the ninth contraction in 10 months, and retail sales in Germany slid for the third month in four in May.

Nokia fell 2.5 percent to 14.10 euros today, losing 5 percent this week.

Commerzbank Securities cut its recommendation on Nokia to "reduce" from "hold" on Wednesday, citing concern mobile-phone service providers such as Orange SA will introduce more of their own branded phones.

Bayer, Germany's second-biggest drugmaker, lost 1.2 percent to 19.42 euros today, for a 4.6 percent decline since last Friday.

Vendex tumbled 13 percent this week to 8.50 euros. The company expects a loss of as much as 50 million euros (US$57 million) at its Vroom & Dreesmann unit this fiscal year after revenue from cosmetics and music fell in the second quarter. Sales at the subsidiary slipped about 5 percent in the three months ended in June.

MMO2, the fourth-biggest UK mobile phone company, fell 3.2 percent to £0.5325 after Goldman Sachs lowered its recommendation to "underperform" from "in-line." The company and rivals in the UK may have to reduce tariffs as competition mounts, according to the brokerage. MMO2 shares lost 8.2 percent in the week.

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