Techs pummel Eurostocks, NY eyes confidence data

London, Oct 30: Technology and telecom shares pummelled European bourses on Tuesday as Wall Street geared up for another weak session ahead of key consumer confidence data and fresh worries about Argentina’s debt rattled Spanish stocks.

By 1127 GMT the pan-European FTSE Eurotop 300 was down 2 per cent, wiping out last week’s gains and taking it back to September 11 levels.

The narrower blue-chip DJ Euro Stoxx 50 dropped 2.6 per cent to 3,433 points, dropping through key support levels as US markets looked set for another slump. The tech-laden Nasdaq was indicated down a further 1 per cent at the open on top of Monday’s 4-per cent drop, while S&P Futures were off 0.3 per cent.

Technical analysts said the indices were ripe for correction after their strong rally in the past month when bourses recovered to early September levels after a near 20-per cent slide in the immediate aftermath of the attacks on the US.

“We still consider that the bounce is over...indicators (on the Euro Stoxx 50) are about to give sell signals and a drop below 3,482-3,452 could trigger a strong correction down to 3,150,” said technical analysts at KBC Securities in Paris.

French firm Alcatel led the downturn in technology stocks as fears grew that the telecom equipment firm would issue another profit warning when it reports third-quarter numbers on Wednesday.

The company has already said it would have a tough time sticking to its forecast of an operating profit this year and most analysts polled ahead of quarterly figures said that goal was now out of reach.
Alcatel is forecast to post a third quarter net loss before amortisation and exceptional items of 309 million euros, against a $297-million profit a year earlier.

Other mobile phone firms were also out of favour again. Nokia, Siemens and Ericsson all joined the list of European blue-chip losers with losses between 4-6 per cent. The DJ Stoxx technology index was down 5.55 per cent at 331 points. Telecoms also fell from grace, down 3.8 per cent as DeutscheTelekom and Vodafone dropped around 4 per cent a piece.

Telefonica and SCH both fell heavily, contributing to a 2.8-per cent fall on Madrid’s IBEX blue-chip index, due to their exposure to Latin America.

After many delays in economic plans to prop up the country,
the Argentine president is labouring to seal a huge debt swap, but markets in the region plummeted on fears of an effective default on its $132-billion debt. Meanwhile the steady trickle of firms reporting the impact of economic woes continued.

— Reuters