Posted on 06/26/2002 1:34:50 AM PDT by HAL9000
European bourses came under intense pressure in early trade on Wednesday as US telecoms and data services group WorldCom became the latest company to declare accounting irregularities.The pan-European FTSE Eurotop 100 index tumbled 4.4 per cent to 2,211.73, while London's FTSE 100 was 3.9 per cent weaker.
The Xetra Dax index in Frankfurt fell 5.7 per cent and the CAC 40 in Paris fell 4.5 per cent and
WorldCom said it would restate its results for 2001 and the first quarter of 2002 after uncovering what appeared to be a $3.8bn fraud in its books. It also fired its chief financial officer.
The news heightened concerns about accounting practices at US companies following the collapse of Enron last December and allegations of financial scandals elsewhere, including industrial conglomerate Tyco.
On the new markets, London's Techmark 100 fell 4.3 per cent and the Nemax 50 shed 6.8 per cent.
In New York, the markets finished lower even before WorldCom dropped its bombshell.
The Dow Jones Industrial Average fell 1.7 per cent and the Nasdaq Composite fell 2.5 per cent.
Banking and oil stocks accounted for about a third of the FTSE Eurotop 100's decline as they gave back some of the previous session's gains.
Deutsche Bank failed to lift the gloom despite announcing plans to buy back 10 per cent of its shares by September 2003. The shares fell 4.9 per cent.
In the oil sector, BP fell 2.9 per cent, Royal Dutch eased 5.4 per cent and TotalFinaElf shed 2.8 per cent.
Technology and telecoms stocks also went into retreat. France Telecom was down 15.9 per cent, Vodafone Group was 7.4 per cent lower and Deutsche Telekom was down 7.6 per cent.
Alcatel , the French telecoms equipment maker, was frozen limit-down after it said it expected to report an operating loss for 2002 and said it was launching an additional restructuring plan.
The news helped drive Finnish rival Nokia down by 8.5 per cent, while Ericsson of Sweden by 12.4 per cent.
US interest rates will be back on the agenda later in the day when the Federal Reserve announces its decision on interest rates. No change is expected at this stage although investors will be keen to hear any comments about the economy from the central bank.
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