An upbeat earnings outlook from Munich Re provided one bright spot in the financial sector, which otherwise nursed worries about possible exposure to Enron - the US energy trader teetering on the edge of bankruptcy.
Munich Re jumped 4.8 per cent to €300.90 as the market homed in on the group's forecast of strong growth and a substantial increase in earnings next year. The re-insurance giant reported a record loss of €1.2 billion in the third quarter, as claims from the September 11th attacks weighed on profits, but said it still expected a positive result for the whole of 2001.
Other financials were less upbeat. Commerzbank was one of the harder hit groups, as concern over its exposure to Enron and its plans to expand investment banking in the US sent the shares down 2.7 per cent to €19.46. Deutsche Bank, which said it faced a maximum loss of "tens of millions of dollars" as a result of revolving credit facilities, dipped 1.8 per cent to €71.82. Dutch group ABN-Amro fell 1.5 per cent to €17.69 as it declined to comment on its Enron exposure. French insurer Axa edged up 0.1 per cent to 24.01 as the group said its US business, Axa Financial, had no direct exposure to Enron.
European utilities were little moved, saying they had scaled back dealings with Enron over the past two months to limit losses if the US group collapsed.
Bullish broker comment cut no ice with airline stocks, which came off sharply in spite of New York upgrades for a raft of US carriers and a London rerating for Air France.The French airline lost 4.9 per cent at €14.27. Lufthansa and KLM fell 0.3 per cent to €14.55 and 1.1 per cent to €13.15 respectively.
Drugs group Roche put on 1.7 per cent to SFr118.50 (€81), on continuing rumours that Novartis was building a stake.
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