Market Report - Europe

The banking sector once again bore the brunt of the damage that sent Frankfurt back below the levels at which the market had begun 1998. The Xetra DAX index ended down 336.29 at 4,094.62, 130 points below its final reading of 1997.

The big four banks were again heavily sold. Dresdner Bank sank 4.85 deutschmarks to DM55.15. Deutsche Bank lost DM5.39 to DM79.61, Commerzbank fell DM4.70 to DM40.45 and HypoVereinsbank gave up DM8.55 to DM115.15. Both Dresdner and Deutsche Bank have fallen more than 50 per cent from their year-highs. Among insurers, Allianz dropped DM57 to DM455.

Siemens lost DM10.40 to DM79.05 even as it posted strong personal computer sales. SAP extended recent sharp falls with another of DM76 to DM702.

Paris had another torrid session, sliding 159.9 to 3,038.01 on the CAC-40 index for a two-day decline of 9.2 per cent in heavy volume. Turnover was 16.8 billion francs. Banks were again in the thick of the action. BNP fell Ffr27 to Ffr273 and CCF came off Ffr45 or 12.5 per cent to Ffr315. Car makers, seen as a front-line sector in the event of marked economic slowdown, fell steeply. Renault lost Ffr29 at Ffr195 and Peugeot Ffr144 or 15.1 per cent at Ffr812. Michelin shed Ffr20 at Ffr200.

Goldman Sachs cut earnings and target price for LVMH, which fell Ffr40 to Ffr725.

France Telecom stood out doggedly against the down trend, gaining Ffr14.50 to Ffr346 in turnover of Ffr1.1 billion.

Amsterdam fell through the 900 level on the AEX index to extend its decline since the peaks of July to 32 per cent. Financials were again the main losers, and at the close the benchmark was off 38.18 at 895.97. ABN Amro fell two guilders to Fl 30.10 in 14.7 million shares traded and Fortis Amev fell Fl 8.80 or 8.3 per cent to Fl 97. Cyclicals also took a beating. Akzo Nobel shed Fl 5.70 or 8.5 per cent to Fl 61.30. The day's single firm feature was telecommunications leader KPN, up Fl 1.80 at Fl 60.

Milan was hit by a sell-off in banking shares and the Mibtel index fell 880 to 17,879. Banca Commerciale Italiana fell 254 lire or 2.6 per cent to L9,700. The shares, which gained recently on merger rumours, met heavy profit-taking. Reports that the BCI board had come under the scrutiny of Italy's market watchdog also weighed on prices. Banca di Roma, BCI's rumoured merger partner, fell L280.

Madrid's general index was dragged lower, down 42.89 to 644.82, by weakness in Latin American-linked stocks.

Banks with such links led the falls, with Santander down 325 pesetas or 15 per cent to Pta1,870, Banco Bilbao Vizcaya losing Pta155 or 10 per cent to Pta1,365 and BCH down Pta95 to Pta1,220.