Financials in doldrums as euro slide continues

German equities picked up where they left off on Friday, edging lower in subdued Frankfurt trading. Financials stayed in the doldrums, hit by another wobbly day for bond markets as the euro probed all-time lows against the dollar.

Insurers were again noticeably weak with Allianz off €7.74 at €384.61 and Munich Re down €6.61 or 2 per cent at €319.39. In banks, Dresdner came off 99 cents at €52.21.

The weak opening for the Nasdaq and the Philadelphia chip index kept tech stocks under a cloud. Deutsche Telekom fell €1.15 at €43.50 while component makers Infineon and Epcos lost 35 cents at €68.55 and 60 cents at €107.90 respectively.

Morgan Stanley Dean Witter cut Intershop Communications from outperform to hold and sent the Neuer Markt stock down €5.54 at €97.95. The Xetra Dax index was off 15.49 at 7,252.28 at 5.30 p.m. German time.

Paris lost further ground as the Nasdaq continued its descent of recent days and the euro recorded a new low. But the market was finely balanced, with 21 declining stocks and 19 risers. The CAC 40 index closed 0.4 per cent lower at 6,675.01.

Among winners, Total Fina Elf continued to rally as oil prices resumed their surge. The stock was one of the best gainers in the CAC, rising 4.1 per cent to €186.

In spite of rate worries, banks were strong, with BNP Paribas up 2.1 per cent to €105.70 and Societe Generale up 2 per cent to €69.90. But France Telecom, the biggest stock in the index, closed 4.1 per cent lower as telecoms across Europe reflected the slide on the Nasdaq of recent days. The Eurotop telecom sector index was down 2 per cent.

Investors were also worried that France Telecom may have lost the initiative in Internet mobile phone services after rival Cegetel forged ahead last Friday with its own via its subsidiary SFR.

Amsterdam managed to end 1.12 better at 687.60 on the AEX in spite of a session of sustained selling for technology stocks.

Milan slipped 0.1 per cent on the Mibtel index to 33,100. The main movers were oil and gas company Eni, which rose to €6.68 as oil prices rose, and electricity utility Enel, which fell to €4.33 after posting slightly worse-than-expected results on Friday.