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European stocks sag amid jitters over credit market

European stocks closed lower on Friday in a volatile session, with credit-market jitters again reverberating through the market as Cadbury Schweppes delayed the sale of its US beverage unit on worries over the financing that potential buyers could receive.

A shaky FTSE 100 index lost 0.6 percent to close at 6,215.20, a day after London's biggest one-day selloff in percentage terms in four years -- a retreat that resulted in the index's biggest weekly loss since 2002.

The German DAX 30 index gave up 0.8 percent to stand at 7,451.68 while the French CAC-40 index dropped 0.6 percent to 5,643.96.

All European indexes closed with sharp losses on Thursday, as Wall Street plunged on concerns about shaky credit markets and the troubled US housing sector.

One of the main concerns for European and US investors is that takeover activity engineered by private-equity firms -- one of the key reasons for several European markets recently hitting all-time highs recently -- could dry up.

"Stocks have been supported by takeover hopes. As finance becomes more expensive, this support is disappearing," said Jeremy Chantry, head of research at London-based stockbroker Hichens, Harrison & Co.

Eric Vergnaud, an economist at BNP Paribas, said markets may be overlooking positive signs.

"In a tumultuous week, some key news almost went unnoticed: the IMF raised its forecast for world growth, which is now expected to exceed 5 percent in both 2007 and 2008, after 5.5 percent last year and 4.9 percent in 2005," he told clients.

"The dynamic momentum of the emerging countries, led by China, India and Russia, have driven up world economic performances, and a new equilibrium is taking shape that no longer depends on the performances of the US, Japan or Europe," Vergnaud said.

A case in point came from candy and beverage group Cadbury Schweppes, which said it's decided to extend the sale timetable for its US beverages business following volatility seen in the leveraged debt markets. Cadbury shares rose 2.4 percent as investors expressed relief that the sale wasn't scrapped.

Across the 13-nation eurozone, the EuroStoxx 50 index was off by 0.26 percent at 4,242.05 points.

In Amsterdam, the AEX index gave up an additional 1.19 percent to 526.69 points, while the Swiss SMI was essentially unchanged at 8,705.57 points.

In Milan the SP/MIB was down 0.23 percent at 39,581 points, but in Madrid the Ibex-35 bucked the overall trend and gained 0.32 percent to 14,587.50 points.

Brussels' BEL-20 closed 0.64 percent lower at 4,341.99 points.
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