Wall Street Decline Hits Europe
- By Leonard Santorelli
- Feb. 15 2000 00:00
LONDON -- European stocks fell in early Monday dealing, weighed down by interest rate worries and a sharp drop in New York on Friday when Internet stocks were badly hit.
The decline on Wall Street also hurt the dollar, which was already jittery over a speech to be given by U.S. Federal Reserve Chairman Alan Greenspan later this week. The greenback weakened about a yen in early European markets.
European government bond yields rose in thin early trade with dealers expecting range-bound trade ahead of market-moving data later in the week. Futures prices opened steady but later fell in relatively low volume.
London, Frankfurt and Paris got the week off to a shaky start, unnerved by Friday's 2 percent fall on Wall Street. Nasdaq, the high-flying technology index also tumbled by over 2 percent.
Asian stock markets were generally lower following the U.S. stocks slump as a slide in shares in Microsoft, the world's biggest company by market value, dragged heavily on the markets.
"I expect to see profit-taking going on after two excellent weeks and it would be no surprise to see the telecom and technology areas are part of that take-profit policy," said Achim Matzke, market analyst at Commerzbank in Frankfurt.
Paris suffered the steepest decline in early trade, dipping 0.7 percent tracking the slide in U.S. markets.
"The index is currently in a consolidation period that looks quite erratic," said KBC Securities' Cyril Baudrillart.
Alstom was up 2.3 percent, automaker Renault climbed 0.95 percent and Air Liquide advanced 0.35 percent as investors moved into the overlooked sector.
The Eurotop 300 index was down 0.6 percent while the Euro STOXX 50 index fell 0.4 percent after closing in the plus column on Friday.
London retreated 0.3 percent. "Interest rate worries are really bearing down on the market now. We saw a lot of weakness on the close in London on Friday, Wall Street was bad and Asia looks bad too. All in all it's not too clever," said one dealer.
Vodafone Airtouch traded around 3 percent lower in heavy, volatile trade ahead of the stock's reweighting after its takeover of Germany's Mannesmann, which will raise the stock's weighting in the blue-chip FTSE 100 index to 13.5 percent.
In currencies, the dollar slipped nearly a yen with dealers saying the focus was very much on how Wall Street performed ahead of Greenspan's testimony to Congress on Thursday, at which some believe he may signal a more hawkish stance on U.S. interest rates.
"We had another 2 percent loss on the Dow which was fair-sized, and Nasdaq sold off at the same time. Both of them going down gives the dollar a softer footing," said Claudio Piron, treasury economist at Standard Chartered Bank in London.
The dollar briefly fell to one-week lows near 108 yen, more than 1.5 yen below last week's five-month peaks, and hovered around the euro, within a cent of last week's lows just short of the one-for-one level.
For the euro, activity was seen centering around Thursday's German business climate survey from the Ifo institute.
The U.S. currency also came under pressure on speculation that Japanese investors were set to repatriate gains on interest revenue from U.S. Treasury holdings.