Europe's benchmark stock indexes may have further to fall next week as reports on the region's economy, as well as corporate earnings, give many investors a reason to shun shares.
"No one wants to buy anymore," said Jan Leroy, who helps manage 6 billion euros (US$5.9 billion) at Petercam Asset Management in Brussels. "Little by little the economy is taking a turn for the worse."
He recently sold shares of Deutsche Telekom AG and Credit Suisse Group.
The Dow Jones Stoxx 50 Index slumped 6.5 percent, its biggest drop in nine weeks, to 2,389.37. France's CAC 40 Index ended the week at its lowest since January 1998. Germany's DAX Index shed 9 percent, solidifying its position as the world's worst performer this quarter among benchmark stock measures. All three have fallen for four weeks in a row.
Industrial production unexpectedly fell 1 percent in France during July and dropped 0.3 percent in the US during August, reports showed this week. The figures suggested that slowing economic growth will stunt earnings.
Cap Gemini SA, Europe's largest computer-services company, slumped 20 percent for the week. Most of the loss occurred after a US rival, Electronic Data Systems Corp, slashed its third-quarter profit estimate to a fifth of its previous forecast.
German business confidence probably fell in September for a fourth month, according to the median forecast of 26 analysts surveyed by Bloomberg News. The survey is due Wednesday. On the following day, the French government will publish an index based on a survey of 2000 companies.
In the US, a report on consumer confidence is scheduled for Tuesday, the same day that the US Federal Reserve meets to consider whether to cut interest rates.
"One or two quarters of almost no growth in the US would be devastating for corporate profits," said Leroy, who has boosted the cash he holds to about 6 percent of his assets from between 1 percent and 2 percent normally. "If it rains in the US, you feel the drops in Europe."
Alcatel SA said sales this quarter will fall about 15 percent from the prior three months. For the week, its shares fell 28 percent, the biggest loss for a company in the Stoxx 50 was removed from the index at the close of trading yesterday, in keeping with a reshuffle announced Sept. 2.
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