BBC

Wednesday, 28 March, 2001, 12:39 GMT 13:39 UK

Tech warnings hit shares

Europe's share revival stalls on Wednesday The recent rally by Europe's major stock markets ended on Wednesday, as profit warnings from technology companies in the US battered investor confidence.

Telecom and technology stocks depressed London's FTSE 100 during morning trading. The blue-chip index fell 1.4% to 5,647 points by 1300 (1200 GMT).

The Canadian telecoms company, Nortel, issued a profits warning late on Tuesday, cutting its first-quarter estimates, while Palm also revised down its sales forecasts.

The bad news from technology companies also dampened reports of a rise in US consumer spending from the non-profit business group, The Conference Board.

The results put an end to a short-lived revival on the European markets, after shares spent Tuesday clawing back some of last week's losses.

'A dose of reality'

Germany's blue-chip DAX also opened lower, dragged down by its technology stocks. At 1300 UK time, the Dax had shed 1.4% to 5,852.

French stocks followed suit after reversing earlier gains. The blue chip index Cac-40 lost about 1% to 5,174.

"Today is a real test for the market," said a dealer in London.

"The warnings brought a dose of reality after a sharp rally and now we will see whether confidence really has returned."

Tokyo's stock markets, however, closed higher on Wednesday among hopes of a new package to prop up the economy.

The benchmark Nikkei average finished up 127.18 points or 0.93% at 13,765.51.

High expectations in Tokyo

The expected changes in Japanese economic policies prompted investors to buy both "new economy" shares and those of traditional manufacturers.

"No one knows for sure what the policy steps will look like and how effective they are," said Masayoshi Okamoto, a trader at Jujiya Securities.

"But investors will hold high hopes for the possible steps at least until they actually see them, and the market will keep on riding on the high expectations."

The government plans to put the economic package together in early April. A rally on Wall Street overnight also helped to improve sentiment in Asia.

Hong Kong's Hang Seng index closed up 234.81 points at 12,942.71.

On Tuesday, the Asian markets had fallen, with the Nikkei index closing down 1.6% at 13,638 and Hong Kong's Hang Seng index down 2% at 12,708.

European rate cut

European shares could receive a further boost from a possible cut in interest rates by the European Central Bank.

The eurozone's central bank is widely expected on Thursday to reduce interest rates in the 12 countries that use the euro.

The move was signalled last week when ECB chief economist Otmar Issing, and Bank of France chief Jean-Claude Trichet, said the bank was no longer worried about inflation.

"While we were very, very concerned about inflation a month ago... we are not any more today," Mr Trichet told French radio.

-- Anonymous, March 28, 2001

Answers

As of 11 AM, curbs on the Dow - it dropped 210 in the first hour. Double damn, and I say that not even being in the market.

-- Anonymous, March 28, 2001