Friday, 21 September, 2001, 10:55 GMT 11:55 UK

European markets slump

Shares across Europe have hit fresh lows as the wave of mass layoffs in aviation and other industries heightened fears of a global recession.

In London, the benchmark FTSE 100 shares index lost nearly 7%, hitting its lowest levels for more than four years,

Markets snapshot, 1049 GMT London: FTSE 100 -6.7% Frankfurt: Dax -6.1% Paris, Cac 40 -5.9% Closed:

Tokyo: Nikkei 225 -2.35% Hong Kong: Hang Seng -4.12%

And stock markets on mainland European fared even worse.

In Frankfurt, the main shares index had at one point lost 7.1%, with Paris's Cac 40 down 6.2% at its lowest point.

Ifo worries

The pressure on shares in German companies intensified after the release of the monthly survey of the business climate by the Ifo economics institute.

The August figures for German companies' expectations of future performance showed a slight decline, nearing a five year low.

The survey period ran up to mid-September, thus including the first few days of reaction following the attacks on the US on 11 September.

But analysts said the survey was effectively void, and that the situation was likely to get worse.

"There is a lot of uncertainty in the figures because part of the replies came in after the attacks," said Andrew Snowball, of Julius Baer Investments in Frankfurt.

"August is probably a void month because the index reflects a different world.

"I expect that the business expectations index will be significantly lower next month."

Insurance in trouble

Among individual shares, German reinsurer Munich Re fell after admitting that its liabilities stemming for last week's terrorist attack on the US would be at least double previous forecasts.

France's Axa was also being sold heavily, down 6%, while manufacturing companies including carmakers Renault and Porsche were facing similar sell-offs.

In London, today is the day the recent reshuffle of the FTSE listings takes effect, which could spark some buying of stocks which are entering the blue-chip FTSE 100 index.

But analysts said the effects are likely to be limited at best, and the expiry of index futures and options today is further weighing on sentiment.

Lay-offs hit confidence

The vicious circle of stock sell-offs gathered speed as concerns about the health of airlines, now suffering with sharply rising insurance costs as well as a decline in passengers, undermined US stock markets on Thursday.

Impact of attacks US: Dow Jones -12.8% US: Nasdaq -13.2% London: FTSE 100 -12.7% Paris: Cac-40 -18.3% Frankfurt: Dax -21.4% Tokyo: Nikkei 225 -7.1% Figs: Close of trade 10 Sept (11 Sept Tokyo) to 0900 GMT 21 Sept

Analysts also fear that High Street spending - viewed as the major prop of major economies in recent months - is poised to decline as the effect of redundancies knocks consumer confidence.

In the US on Thursday, dealers initially hoped that a tub-thumping speech delivered by US President George W Bush to a packed joint session of Congress could help in triggering a patriotic rally in the US at least.

But there was no such revival in Asian shares, where the ongoing uncertainty continued to dog sentiment.

"We are not looking for good news at the moment," said Adrian Foster, senior economist at Nomura Securities in Singapore, where the main index fell nearly 5%.

"We pretty much take it for granted that these markets are going to get absolutely slammed."

No takers

In London, not a single stock among the top 100 stood in positive territory in mid-morning trade.

Share in insurance firms continued to bear the brunt of the selling, with Royal Sun Alliance stock, down 13% in mid-morning trade, among the top FTSE 100 fallers.

But stocks in technology firms were also under pressure, as dealers concluded that their heavy debt burdens put them among the shakiest companies on the market.

-- Anonymous, September 21, 2001

Answers

Investors Play It Safe, Sell Stocks

By AMY BALDWIN AP Business Writer

September 21, 2001, 6:00 AM EDT

NEW YORK -- Lingering uncertainty about the frail economy and how the government will respond to terrorist attacks has put the market on course for one of its worst weeks ever.

The sinking Dow Jones industrial average proves how jittery investors are right now. The blue-chip index fell 382 points Thursday, bringing its loss for the week to 1,229 points -- a tumble of nearly 13 percent. It finished at 8,376.21 -- the lowest close since October 1998.

"It's rollercoastering down," said Matt Brown, head of equity management at Wilmington Trust.

The market's anxiety surged Thursday as Federal Reserve Chairman Alan Greenspan told Congress the terrorist attacks have hurt the economy in a number of ways, including a drop in travel and consumer spending and last week's four-day shutdown of the stock market.

Greenspan tried to reassure investors by saying he is "confident that we will recover and prosper as we have in the past," but the Dow still fell 4.4 percent.

Barring a colossal rally Friday, the Dow was likely to have its biggest one-week point drop, eclipsing the 821.21-point fall in the week ending March 16. As of Thursday, the Dow's percentage loss for the week was its ninth largest.

The broader market also skidded lower Thursday, with the Nasdaq composite index falling 56.87, or 3.7 percent, to 1,470.93 and the Standard & Poor's 500 index off 31.56, or 3.1 percent, at 984.54.

It marked the first time the S&P 500, considered the market's best indicator, has closed below 1,000 since October 1998.

Analysts said investors are acting like consumers -- very cautious. No sense in buying anything, whether it's a couple shares of Microsoft, a new car or a vacation, if the country is heading into war or recession.

"Nobody has a clue what tomorrow morning will bring. And, when there is so much uncertainty, people don't want their money at risk," said Gary Kaltbaum, market technician for Investors' Edge Partners.

And that kind of careful thinking by investors and consumers bodes ill for the economy.

"The economy was in bad shape before this event, and this event just magnified everything by thousands," Kaltbaum said.

The market was expected to remain quite vulnerable as companies announce layoffs and profit warnings linked to the attacks in which hijacked airliners annihilated the World Trade Center and destroyed part of the Pentagon.

The financial aftermath has been the loss of tens of thousands of airline jobs, and an insurance industry warning it will suffer for years under the weight of massive payouts. The financial, retail and entertainment sectors are also expecting problems.

Such widespread fallout was seen Thursday in the market. Dow component Boeing, which has announced it will cut as many as 30,000 jobs, fell $2.85 to $29.76. Implementing the first of its 12,000 layoffs, Continental Airlines dropped $3.51 to $13.95.

Insurer American International Group, which said last week it expects its pretax losses from the attack to total $500 million, fell 60 cents to $68.90.

___<

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com Copyright © 2001, The Associated Press

-- Anonymous, September 21, 2001

BBC Friday, 21 September, 2001, 11:12 GMT 12:12 UK European markets slump

Shares across Europe have hit fresh lows as the wave of mass layoffs in aviation and other industries heightened fears of a global recession.

In London, the benchmark FTSE 100 shares index lost 7.1%, hitting its lowest levels for more than four years.

And stock markets on mainland European fared almost as poorly.

In Frankfurt, the main shares index had at one point lost 7.1%, with Paris's Cac 40 down 6.2% at its lowest point.

The slump means that the opening of US trading this afternoon will be even more keenly watched than usual.

David Buik of Cantor Index told BBC News 24 that while early estimates had the Dow Jones industrial average falling perhaps 200 points, a more realistic forecast would now be a 500-point fall.

Ifo worries

The pressure on shares in German companies intensified after the release of the monthly survey of the business climate by the Ifo economics institute.

The August figures for German companies' expectations of future performance showed a slight decline, nearing a five year low.

The survey period ran up to mid-September, thus including the first few days of reaction following the attacks on the US on 11 September.

But analysts said the survey was effectively void, and that the situation was likely to get worse.

"There is a lot of uncertainty in the figures because part of the replies came in after the attacks," said Andrew Snowball, of Julius Baer Investments in Frankfurt.

"August is probably a void month because the index reflects a different world.

"I expect that the business expectations index will be significantly lower next month."

Insurance in trouble

Among individual shares, stock in German reinsurer Munich Re fell after admitting that its liabilities stemming for last week's terrorist attack on the US would be at least double previous forecasts.

Shares in France's Axa were also being sold heavily, down 6%, while stock in manufacturing companies including carmakers Renault and Porsche faced similar sell-offs.

In London, Friday is the day the recent reshuffle of the FTSE listings takes effect, which could spark some buying of stocks which are entering the blue-chip FTSE 100 index.

But analysts said the effects are likely to be limited at best, and the expiry of index futures and options today is further weighing on sentiment.

Lay-offs hit confidence

The vicious circle of stock sell-offs gathered speed as concerns about the health of airlines, now suffering with sharply rising insurance costs as well as a decline in passengers, undermined US stock markets on Thursday.

Analysts also fear that High Street spending - viewed as the major prop of major economies in recent months - is poised to decline as the effect of redundancies knocks consumer confidence.

In the US on Thursday, dealers initially hoped that a tub-thumping speech delivered by US President George W Bush to a packed joint session of Congress could help in triggering a patriotic rally in the US at least.

But there was no such revival in Asian shares, where the ongoing uncertainty continued to dog sentiment.

"We are not looking for good news at the moment," said Adrian Foster, senior economist at Nomura Securities in Singapore, where the main index fell nearly 5%.

"We pretty much take it for granted that these markets are going to get absolutely slammed."

No takers

In London, not a single stock among the top 100 stood in positive territory in lunchtime trade.

Share in insurance firms continued to bear the brunt of the selling, with Royal Sun Alliance stock, down 13% at lunchtime, among the top FTSE 100 fallers.

But stocks in technology firms were also under pressure, as dealers concluded that their heavy debt burdens put them among the shakiest companies on the market.

-- Anonymous, September 21, 2001