Reuters: Tech exodus slams eurostocks as Nasdaq crumbles

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Thursday November 30, 2:37 pm Eastern Time

Tech exodus slams eurostocks as Nasdaq crumbles

By Sophie Walker and Louise Ireland

LONDON, Nov 30 (Reuters) - Europe's beleaguered technology, media and telecoms stocks plumbed fresh lows on Thursday, as the U.S. Nasdaq index was walloped to levels not seen since August 1999 by more earnings warnings from industry leaders.

The DJ Stoxx technology index closed down 3.6 percent, after sinking earlier to a low of 738 points, while telecoms (^SXKP - news) were off 3.4 percent near a low of 511 points and media fell 2.7 percent after hitting a 413-point low.

Heading the list of blue-chip decliners, Philips Electronics tumbled 8.4 percent and contributed to a 3.7 percent drop in the consumer cyclicals sector .

Warnings on slowing fourth-quarter sales from two U.S. industry leaders, personal computer maker Gateway Inc. (NYSE:GTW - news) and semiconductor maker Altera Corp. (NasdaqNM:ALTR - news) sent Nasdaq spinning more than 6 percent lower at one point.

The benchmark tech index, its robust reputation tarnished by a series of bone-jarring falls in recent weeks, is now around 37 percent down on the year and some 50 percent off its March peak.

As European bourses closed for the day, the Nasdaq was down 5.6 percent after earlier collapsing to a new low of 2,523.04 points. The Dow Jones industrial average was down 2.9 percent, as players sold off technology components there, too.

``These stocks, TMTs, were tomorrow's stars,'' said one fund manager.

``What's really appalling is the lack of visibility (on sales and earnings). That's what the market really hates, and although it's becoming a given these days, people can't get used to it.''

The FTSE Eurotop 300 fell 1.97 percent and the narrower DJ Stoxx 50 2.4 percent.

Traders cited talk that a number of big mutual funds were offloading their technology holdings, but U.S. Janus, the main name doing the rounds, denied it was closing its $6.5 billion global tech fund or cutting its exposure.

TOP TECHS TUMBLE

The biggest losers in Europe read like a who's-who of top tech names. Alcatel and Nokia shed 6.5 percent and 3.0 percent as Siemens and Ericsson followed behind.

France Telecom and British Telecom (quote from Yahoo! UK & Ireland: BT.L) both set fresh year lows, as did British chipmaker ARM Holdings (quote from Yahoo! UK & Ireland: ARM.L).

Other semiconductor firms pummelled by the U.S. warnings included French-Italian STMicroelectronics , down 5.0 percent and Dutch ASM Lithography , off 6.55 percent.

``Some sectors, such as communications equipment, are clearly looking attractive at these levels, but the problem is that if people are nervous about the market as a whole then they are twice as nervous about technology stocks,'' said Simon Thorpe, technology analyst at UBS Warburg.

``Everything comes back to the U.S. economy, and if you've been on high ratings you only need a small change in earnings to see the stock go off some way.''

As the battle for the U.S. presidency dragged into a fourth week, the market's view was that Federal Reserve Chairman Alan Greenspan was keeping any monetary decisions under wraps.

``The trouble is no one can call the bottom. It will take a U.S. interest rate cut for things to improve and that's not likely in the very short-term. The market really needs it within the next 48 hours and it's just not going to happen,'' said a Frankfurt-based senior equity salesman.

In the latest twist to the presidential election saga, lawyers for Democrat Al Gore filed with the Florida Supreme Court to speed the recount of disputed votes and accused Republican George W. Bush of seeking to ``turn back the clock'' by trying to suppress hand recounts.

In that context, dealers said the markets would focus intently on key labour market data for November, due on Friday at 1330 GMT.

INVESTORS TURN TO FOOD, DRINK, DRUGS

The pharmaceutical (^SXDP - news) and food and drink sectors were the only ones to gain, edging up 0.3 and 0.2 percent on defensive buying.

AstraZeneca (quote from Yahoo! UK & Ireland: AZN.L) and Glaxo Wellcome (quote from Yahoo! UK & Ireland: GLXO.L) gained 4.2 percent and 2.08 percent respectively, while food and drinks group Diageo (quote from Yahoo! UK & Ireland: DGE.L) climbed 3.5 percent and hit a year high of 735 pence.

But generally the mood was grim. Among standout stories, Lernout & Hauspie -- once a leading developer of voice recognition software -- filed for Chapter 11 bankruptcy protection in the U.S. after talks with Belgian and German bankers on rescheduling its debt broke down.

Elsewhere, Britain's NetBenefit (quote from Yahoo! UK & Ireland: NBT.L) halved in value after the Internet company warned that slowing activity would hit sales revenues this year and that its chairman was leaving.



-- (in@economic.news), November 30, 2000


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