Microsoft warning sends TMTs further down

Microsoft's profit warning and lower openings on US markets spelt further falls for Europe's technology stocks, in sharp contrast to recent Fridays. Some of the biggest losers included Dutch cable company UPC, off 10 per cent; SAP, down 8 per cent; and ASM Lithography, which fell 7 per cent.

Telecoms companies continued their dismal performance, with France Telecom down 4 per cent to €98.40, Olivetti 5.2 per cent to €2.99, Sonera 4.9 per cent to €23.40 and Telefonica 6.2 per cent to €18.40. Deutsche Telekom got off relatively lightly with a 2 per cent fall to €37. Deutsche Bank maintained its "buy" rating on the stock and its target of €51 following the company's announcement of a new deal on bulk telephone connections for Internet service providers.

German chipmaker Infineon lost 5 per cent to €44.85 following a similar fall the day before after parent group Siemens said it would reduce its 71 per cent stake. Siemens fell 1.6 per cent to €136.90.

Among media stocks, Seat Pagine Gialle, the Italian publisher and Internet service provider, bounced from year lows on short covering and speculation that Italy's competition authority may block its purchase of broadcaster TMC. It closed 4.8 per cent higher at €2.32, after hitting a year low of €2.22 on Thursday.

Parcel service groups fell back after a double whammy of negative statements overnight from the US where United Parcel Services and Federal Express both issued profit warnings. The two leaders in Europe fell back, although most brokers felt that the signals from the other side of the Atlantic were of modest significance at worst. TNT Post came off 2.2 per cent at €26.94 and Deutsche Post shed 2.2 per cent at €22.51.

Dutch financial group ING moved centre stage as Goldman Sachs and Credit Suisse First Boston both gave their mark of approval to the group's decision to cut its investment bank operations. Goldman Sachs hit the banking sector hard on Thursday with a downgrade for five leading European groups because of weak capital market trends and higher US loan loss provisions for 2001. But yesterday it restarted ING with a price target of €110.

And Credit Suisse First Boston resumed ING with a strong buy recommendation, with a price target of €105, citing cost cutting potential in life insurance from the integration of Aetna, ReliaStar and ING businesses in the US, along with prospects in Asia and emerging Europe.