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Wed, Jun 21, 2000
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Wall Street Fails to Recover:
Eurostocks End Down

By Richard Baum  Reuters
LONDON — 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 Lane.

In Europe, the relatively small technology sector was the hardest hit.

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 statement.

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 Group Ltd.

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 4 percent.

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.

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