European equity markets fell
sharply on Tuesday as an expected recovery on Wall Street failed
to materialize, with plunging technology stocks the main drivers.
The euro struggled near record lows and only bonds looked in
better shape, helped by money moving out of equities.
Pan-European stock indices were down more than 2 percent,
pressured by a 3 percent slide on London's FTSE 100, as U.S.
shares made an uncertain start after Monday's tumble.
The Dow Jones Industrial Average was down 0.57 percent while
the technology-heavy Nasdaq index gained around one percent
after Monday's 5.6 percent fall.
"It's a tug of war between the bulls and the bears," said
Doug Myers, vice-president of equity trade at Interstate/Johnson
In Europe, the relatively small technology sector was the
British electronics retailer Dixons, which had soared in
recent weeks on the success of its free Internet service, dived
more than eight percent. Finnish mobile phone giant Nokia
tumbled over seven percent. And global news and information
company Reuters was down a similar percentage, undercut by
weakness in U.S. technology stocks and a cautious first quarter
Most other sectors featured losses. Swedish engineering
group Atlas Copco dropped more than seven percent after it
posted a worse-than-expected first quarter result.
The euro recovered a bit after falling to a new record low
against the dollar on Monday but market players said official
European neglect of the euro and comparatively weak European
economies would keep the single currency sliding.
"European officials have suggested they are more concerned
about price stability than the value of the euro. The target now
is $1.05," said Mike Malpede, senior currency analyst at Refco
The euro was trading around $1.0630, within sight of the
record low set at $1.0584.
A rash of comments from European monetary officials,
including European Central Bank President Wim Duisenberg, has
convinced traders they need not fear central bank intervention
if they continue to sell the euro lower.
Euro zone bond markets benefited from the stock market rout,
with the 10-year Bund future rising 0.27 point to 115.80. Losses
in stock markets often boost bonds as investors seek the
relative safety of fixed-income investments.
The technology sell-off overshadowed continuing talks that
could lead to one of the world's biggest mergers, between
Deutsche Telekom and Telecom Italia. Shares in Telecom Italia
remained suspended in Milan. Deutsche Telecom was off almost
European Competition Commissioner Karel van Miert said that
the two companies would probably face a lengthy European Union
regulatory probe if they merged.
In Asia, technology shares felt the heat in Tokyo but the
overall market was slightly higher, up 0.14 percent. Most other
Asian stock markets followed Wall Street's lead.
The dollar held firm just below 118 yen.