Sun, Sep 04, 2005 - Page 10 News List

Concern over US economy hampers European markets


European stock markets closed lower on Friday as concerns over the long-term effect of Hurricane Katrina on the US economy continued to mount.

The London FTSE 100 index ended flat, off 0.03 percent at 5,326.8 points, while in Frankfurt the DAX 30 index dipped 0.11 percent to 4,837.81 and in Paris the CAC 40 fell 0.46 percent to 4,403.90.

The DJ Euro STOXX 50 index of leading eurozone shares declined 0.24 percent to 3,274.42.

Over on Wall Street, stocks traded lower as concerns over the devastation in New Orleans and the impact of Hurricane Katrina on the economy offset a pullback in crude oil prices and a broadly positive August employment report.

US non-farm payrolls increased by a seasonally adjusted 169,000 last month, below the 197,000 expected by economists, although upward revisions totaling 44,000 in prior months put total employment slightly higher than expected.

In London, Old Mutual dropped 2.25 percent to £1.4125 after the insurer said it was offering 43.60 kronor (US$5.90) per share for Skandia, valuing the Swedish insurer at 44.9 billion kronor.

"There are some positive aspects, but we think it's relatively value-neutral," said Johnny Vo, insurance analyst at Fox-Pitt, Kelton. "The point is that Old Mutual is becoming less of an emerging market play, and more of a European play."

Under the offer, which is conditional on receiving the backing of the Skandia board by Sept. 23, Skandia shareholders would receive 16.50 kronor and 1.37 new Old Mutual shares for every Skandia share they own.

The bid is higher than an earlier proposed cash and shares offer by the company of 42 kronor per share.

Skandia shares were quoted at 41.50 kronor in closing Stockholm trading, below the bid price, suggesting that investors were not convinced that it would be successful.

In Paris, weaker-than-expected earnings from cosmetics giant L'Oreal in the first half sent the stock down 3.7 percent at 63.75 euros. Net profit rose to 892 million euros from a pro forma 878 million last year, well below expectations, but dealers also noted that the shares had closed at a 52-week high Thursday.

Elsewhere in Europe, the Swiss Market Index fell 0.33 percent to 6,532.07, the Amsterdam AEX shed 0.15 percent at 389.31 and the Milan SP/MIB ended flat, off 0.04 percent at 33,672.0.

The Brussels BEL-20 rose 0.14 percent to 3,228.50 and the Madrid IBEX-35 climbed 0.11 percent to 10,145.0.

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