Weaker US markets and oil fears drag Paris down

Shares in Paris resumed their downward trend as US markets opened weaker and oil prices stayed high. It was also a weak day for France Telecom, the biggest stock in the CAC, which has had its weighting in the Eurostoxx index cut, inducing fund managers to sell. It lost 2.5 per cent to €123.

Electronic equipment group Sagem fell 8.9 per cent to €277 amid general weakness in technology companies, in spite of announcing a €300 million order from the government arms procurement agency. Sagem has been falling since its first-half results released last week which prompted Societe Generale to cut its rating from "buy" to "neutral". But losses on the bourse were broad-based. SocGen was off 3.4 per cent at €67.65, Renault 3.5 per cent at €48.15 and Alcatel 4.5 per cent to €87.20.

The one bright spot was computer services company Cap Gemini which closed 2.3 per cent up at €216, off its intraday high as hopes the Nasdaq would rebound proved unfounded.

With oil prices still near 10-year highs, Total Fina Elf rose 0.4 per cent to €181.30. Trading in web services company Jet Multimedia was halted at €73.50 after Telecom Italia launched a friendly cash bid of €83 a share.

Frankfurt lost ground as oil price-sensitive sectors such as chemicals lurched lower. BASF fell €1.09 to €40.60 and Bayer 98 cents to €43.04 as worries about the cost impact of high oil prices and a weak currency undermined investor sentiment.

Banks were mixed with Commerzbank jumping €1.11 to €33.11 on consolidation hopes. But HypoVereinsbank lost €1.70 at €61.50 and Dresdner came off 10 cents at €47.79 on news that its $1.4 billion US investment banking takeover would dilute earnings.

Amsterdam traded narrowly to end with the AEX index off 7.99 at 668.43. Weakness for technology stocks and financials led the market lower with Philips dipping €2.10 to €52.85 in 19.3 million shares traded and telecoms leader KPN off 31 cents at €27.70.

In financials, ABN Amro fell 50 cents at €26.99 and Aegon 81 cents to €38.71. ING shed €1.72 at €72.76.

Milan was broadly easier as the revised Mib30 index and mid-cap Midex took effect. The broad Mibtel index fell 369 to 32,185. Publishing company L'Espresso, which joined the Mib30 index, fell 3.4 per cent to €14.60 after opening 1.6 per cent higher.