Markets go lower on US interest rate fears

US interest rate concerns continued to overshadow European equities, which moved steadily lower in late trading. The FTSE Eurobloc 100 index ended off 1.1 per cent at 1,059.48. The FTSE Eurotop 100 index shed a similar amount at 3,001.69, while the broader FTSE Eurotop 300 index finished 1.2 per cent lower at 1,299.48.

Zurich turned steeply lower on renewed worries about US interest rates and a lack of foreign demand. The SMI index fell 64.2 or 2.3 per cent at 7,026.4. Financials came under pressure with CS Group seven Swiss francs lower at SFr277.50 (€173.75), while UBS lost SFr12.50 to SFr468 (€293.03). Futures sellings programs hit the pharmaceuticals sector. Roche certificates fell SFr500 to SFr16,750 (€10,487), pressured by a Morgan Stanley downgrade. The company declined to comment on reports that it would have to pay a further $500 million (€477 million) to settle civil suits. Paris fell almost 1 per cent as interest rate-sensitive stocks suffered from concerns about possible fiscal tightening in the US. The CAC-40 index closed 41.40 or 0.9 per cent down at 4,380.99.

Danone, the food manufacturer, and Pinault-Printemps and Promodes, the retailers, were among the stocks to fall on worries that the Federal Reserve might raise interest rates at its policy meeting later this month.

Renault, the motor manufacturer, surged on hopes that stronger than expected economic growth in Japan might help its partnership with Nissan. The shares climbed €3.39 or 9.4 per cent to €39.34 (£30.98) in heavy volume. Frankfurt relinquished initial gains as bonds moved lower and Wall Street made another uncertain start. The Xetra DAX index finished off 49.14 at 5,201.49. Deal speculation got behind truck-maker MAN, lifting the shares 68 cents at €32.33 (£25.46).

Milan reversed early gains and the Mibtel index finished 191 lower at 24,454. Telecoms remained at the centre of attention as investors digested Olivetti's first shareholders' meeting since it won its takeover battle for Telecom Italia. Olivetti gave up 1 per cent to €2.97 (£2.34). Telecom Italia was 1 per cent lower at €9.57 (£7.54).