European Stocks Fall; Alcatel, Nokia, STMicroelectronics Drop
By David Tweed
London, Dec. 10 (Bloomberg) -- European stocks fell amid concern an expected rebound in economic growth next year won't be strong enough to justify share-price gains of more than 50 percent since September. Nokia Oyj, Royal Philips Electronics NV and Alcatel SA led declines.
STMicroelectronics NV slipped after France Telecom SA and Finmeccanica SpA sold stock in Europe's biggest semiconductor company. ABB Ltd. retreated amid concern about asbestos claims after Halliburton Co. lost an asbestos-exposure lawsuit.
The Dow Jones Stoxx 50 Index of European shares dropped 46.38 points, or 1.3 percent, to 3635.30. Stocks retreated after a government report showed that producer prices in the U.K. dropped in November at the fast annual rate since 1958 as growth slows in Europe's second-biggest economy.
``I have sold some of the Alcatel and France Telecom stock I bought at the end of September,'' said Thierry Girardet, who manages about $270 million at Fival SA in Paris. ``We are going to have a recovery next year, sure, but these shares have already risen a lot.''
Alcatel has been the Stoxx 50's best performer since September, jumping 70 percent. Today shares of Europe's fourth- biggest phone-equipment maker declined 67 cents, or 3 percent, to 21.48 euros.
Philips dropped 1.23 euros, or 3.7 percent, to 32.48. Europe's biggest consumer-electronics company has climbed 52 percent since September.
Nokia Retreats
Nokia fell 1.22 euros, or 4.3 percent, to 27.33, cutting its gain since September to 52 percent. Some investors are concerned the biggest mobile-phone maker, which gives an update on its forecasts tomorrow, may have difficulties maintaining its margins as economic growth slows.
``You can't keep meeting your numbers through cost cuts --you have to boost top-line growth,'' said Arnold Gast, who helps oversee about $5 billion in assets at Theodoor Gilissen Bankiers NV in Amsterdam. ``There is not much room left'' for Nokia.
Nokia shares change hands for 42 times forecast earnings, close to the highest since June. Analysts only expect average annual profit growth of about 16 percent over the next five years from the largest handset maker.
ST retreated 2.10 euros, or 5.3 percent, to 37.45. France Telecom and Finmeccanica started a sale to private investors of a total of 60 million shares of the largest European maker of computer chips. France Telecom said it's also selling 1.1 billion to 1.5 billion euros ($1.34 billion) of notes exchangeable into between 22 million and 26 million ST common shares.
``This is a great opportunity to pick up some STMicroelectronics,'' said Girardet, adding that he was planning to buy some shares today.
Swiss Life and ABB Slide
Swiss Life dropped 25 Swiss francs, or 3.1 percent, to 777. Credit Suisse Group, the No. 2 Swiss bank, said it's selling as much as 500 million Swiss francs ($300 million) of bonds exchangeable into Swiss Life stock as it cuts its investment in the nation's biggest life insurer.
ABB fell 1.6 Swiss francs, or 8.5 percent, to 17.25, wiping nearly $950 million from its market value. Europe's largest electrical-engineering company said in April it faces 66,000 personal-injury claims related to asbestos in the U.S. and doesn't know what the ultimate cost will be.
ABB's uninsured payments for asbestos claims in the U.S. rose 6 percent in the first half to about $77 million. Halliburton has been hit by more than $150 million in asbestos judgments in the U.S. this year, increasing concern that ABB's own payments will climb.
ABB shares also dropped after Chief Financial Officer Renato Fassbind quit, following Chairman Percy Barnevik as the second top company executive to leave after profits plunged.
Back-to-Back Losses
The Stoxx 50 is headed for its first back-to-back annual losses on record, losing 20 percent this year after sliding 3.9 percent last year. Every benchmark index in the 15 European Union states, Switzerland and Norway has declined in year-to-date terms except for the Austrian Traded Index, up 6.1 percent.
European share markets will rise 11 percent by the end of next year, according to the average forecast of seven strategists polled by Bloomberg News. After a swathe of interest rate cuts in 2001 to revive economic growth, that wouldn't even halve the Stoxx Index's 26 percent drop since its peak in March last year.
Goldman, Sachs & Co. forecasts that the 12 economies sharing the euro currency will grow just 0.6 percent next year, down from 2001's projected 1.6 percent. The investment bank's strategy team, ranked fifth in the 2001 Reuters Survey of fund managers, sees European stocks rising 4 percent next year.
``There's likely to be little upward trend next year,'' said Peter Sullivan, European equity strategist at Goldman. Earnings forecast for European companies next year are as much as 30 percent too high, he said.
Benchmarks Drop
Almost nine shares declined for every two that advanced in the Dow Jones Stoxx 600 Index, which fell 4 points, or 1.3 percent, to 294.07. Benchmark indexes dropped by more than 1 percent in Europe's eight biggest share markets.
By 1:15 p.m. London time, the value of trading in shares listed in the U.K. benchmark FT-SE 100 Index, Germany's DAX Index and France's CAC 40 Index was less than 40 percent of the respective six-month daily averages.
H. Lundbeck A/S climbed 10 Danish kroner, or 4.4 percent, to 235. Europe's third-largest maker of psychiatric drugs said Swedish regulators approved its antidepressant Cipralex. The approval comes after Lundbeck delayed the European introduction of Cipralex until the first half of 2002 because Swedish authorities requested additional data.
Trinity Mirror Plc dropped 11 pence, or 2.6 percent, to 411.5. The U.K. publisher of the Mirror said advertising at its national newspapers fell in the fourth quarter as businesses cut spending after the September terrorist attacks in the U.S.
Axa, SAS, Emblaze
Axa SA fell 67 cents, or 2.6 percent, to 25.03 euros. The biggest insurer's Axa Asia Pacific Holdings Ltd. unit, which is Australia's second-largest life-insurance company, said full-year profit before asset sales fell 8 percent as it earned less from investments because stock markets declined.
Scandinavian Airlines System declined 3 Swedish kronor, or 4.2 percent, to 69. The Nordic region's biggest carrier said passenger traffic fell 8.4 percent in November, led by a decline in business-class traffic, as the Sept. 11 hijackings continued to scare passengers away from flying.
Emblaze Systems Ltd. slipped 16.5p, or 8.7 percent, to 172.5. The Israel-based, London-listed software maker said its 2001 loss may be wider than expected and revenue ``substantially'' below analysts' forecasts as customers delay contracts.
Total Systems Plc added 14p, or 11 percent, to 137.5. The U.K. supplier of financial-services software said first-half profit more than quadrupled after current clients such as insurers and fund managers bought more of its accountancy products.
Aggreko Plc declined 37.5p, or 9.4 percent, to 363. The biggest renter of generators said it will reduce investment in 2002 as the economic slowdown dents sales.
Medical Marketing International Group Plc advanced 11p, or 21 percent, to 63.5. The U.K. stakeholder in medical companies said it teamed up with Scottish Enterprise to invest in technology that manipulates molecules.
