European Report: Leading European equities eased back yesterday as trading volumes remained thin and investors digested a rather disappointing confidence survey by the German ZEW institute.
A hesitant start by US stocks, in spite of some positive earnings news, did little to improve the mood in Europe. At the close, the FTSE Eurotop 300 index was down 1.1 per cent at 997.29.
Shares in Swatch ticked lower after industry data showed that Swiss watch exports slowed in May after three strong months, suggesting that a recovery in the industry was faltering.
Swatch shares fell as low as SFr34.10 before rallying to finish 2.74 per cent weaker at SFr34.35, while Bulgari dropped 2 per cent to €8.18. Richemont retreated 2 per cent to Fr32.20.
The airlines sector also ran into rough weather after Swiss International Air Lines issued a profits warning, raising doubts about the carrier's chances of survival.The news came just weeks after the airline abandoned plans to join the Oneworld club of airlines led by British Airways.
Swiss shares tumbled 5.3 per cent to SFr10.65 while Lufthansa fell 2.3 per cent to €10.79.
Meanwhile, Alitalia shares were suspended as investors waited for government approval of a €400 million bridging loan that would keep the Italian flag carrier afloat as it puts together a rescue plan.
Oil stocks drifted lower with Royal Dutch sliding 1.7 per cent to €42.76 after UBS downgraded the shares from "buy" to "neutral". The broker maintained its price target of €47.50.
Dutch operator KPN slashed the price for text messages in a bid to drive up usage and claw back market share. KPN edged up 0.2 per cent to €5.98 but Deutsche Telekom fell 2.6 per cent to €13.98 on reports yesterday that the German government planned to sell its remaining stake in the company by 2006.
Novo Nordisk, the Danish pharmaceuticals group, leapt 6.7 per cent to DKr324.50 and was the Eurotop's best performing stock after it said its Novoseven drug had proved effective in treatment of intracerebral haemorrhage in a Phase II study.
French catering group Sodexho Alliance was another big riser after analysts suggested that the company's third-quarter sales figures, due early next month, could prompt a bounce for the stock after losses so far this year. The shares ended 2.5 per cent higher at €21.15.
Greek gaming group Opap climbed 3.3 per cent to €15.24 after the government said it was determined to protect the group's monopoly status. - (Financial Times Service)
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