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European stocks sucked down by Wall Street
March 11, 2004
London - European stock markets skidded lower in early trading on Thursday after steep overnight falls on Wall Street and disappointing results from British insurer Royal and Sun Alliance.
The British FTSE 100 index lost 1.54 percent to 4 475.5 points, the German DAX 30 index dropped 2.86 percent to 3 929.1 points and the French CAC 40 fell 2.02 percent to 3 682.3 points.
The DJ Euro Stoxx 50 index of leading eurozone shares declined 2.08 percent to 2 861.8 points.
The euro stood at $1.2198.
Shares fell back on the heels of markets in New York, where blue-chip stocks tumbled to the lowest levels of the year Wednesday as investors remained cautious about prospects for the world's biggest economy.
News that the US trade deficit inflated to a record 43.1 billion dollars in January dealt a further blow to sentiment in the wake of Friday's unexpectedly small rise in US employment.
The Dow Jones Industrial Average of 30 blue chips slumped 1.53
percent to 10 296.89 points and tech-rich Nasdaq composite slid 1.55 percent to 1 964.15.
The selling infected Asia on Wednesday, when the Nikkei-225
index lost 1.19 percent to 11 297.04 points in Tokyo and the Hang Seng index fell 1.4 percent to 13 024.06 points in Hong Kong.
The losses also had a knock-on effect in Europe, said Hilary Cook, director of investment strategy at Barclays Stockbrokers.
"There has been no doubt that since the beginning of this year the economic news coming out of the United States has been mixed.
"The job creation hasn't been coming through, and yet the markets have enjoyed a pretty good rally and so ripe for a bit of profit-taking," she said.
Also weighing on the London market, insurer Royal and Sun Alliance reported a 38-percent fall in annual headline profits after a difficult year that saw it exit several key businesses.
Royal and Sun Alliance is recovering from a turbulent spell which culminated in a £960-million rights issue, or sale of new shares to existing shareholders, in September.
"The results are mixed, showing a reasonably strong performance from the ongoing businesses but still dogged by losses from the discontinued operations," Merrill Lynch analysts wrote in a note to clients.
"We continue to believe that Royal and Sun shares are fundamentally expensive given the high risk profile... and continue to advise holders to sell."
Shares in the company plunged 10.2 percent to 94.25 pence, while rival Prudential lost 3.3 percent to 477.5 pence and Aviva dropped 2.7 percent to 552 pence. - AFP
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