Sickly eurostocks fall for fifth straight day

European stock markets ended a miserable week with a whimper yesterday, slithering lower in late trade as poor US consumer sentiment figures snuffed out a brief flutter of enthusiasm sparked by GDP data.

The continent`s benchmark indices have chalked up losses every day this week as concerns over the outlooks for telecom operators and equipment makers have spread to the wider market.

Telecoms was once again the worst performer on the DJ index of sectors and British mobile operator Vodafone and Germany`s Deutsche Telekom ended the session as Europe`s biggest losers.

"TMTs (technology, media and telecom stocks) are looking better buys now than they were at the start of the week but that`s only because they`re closer to fair value," said Hu Aarts, European portfolio manager at Merrill Lynch Investment Management.

"Visibility is so poor in these sectors that you can talk to any number of analysts for guidance and come away with no idea who`s right or wrong. I don`t think TMTs will bounce back soon. Visibility is still so bad."

By 1604 GMT, with only Frankfurt still trading, the FTSE Eurotop 300 index of pan-European blue chips was 0.51 per cent lower while the narrower DJ Euro Stoxx 50 index was off 0.39 per cent.

The Eurotop 300 has given up three per cent this week while the narrower DJ Euro Stoxx 50 index has lost nearly four per cent.

Wall Street fared no better. The Dow Jones industrial average, the broader Standard & Poor`s 500 Index and the tech-laden Nasdaq Composite were between 0.4 and 1.5 per cent lower.

US GDP data gave bourses a brief lift in the afternoon, coming in much stronger than expected.

The headline figure for growth in the first quarter hit 5.8 per cent - a per centage point higher than the forecasts of many economists and its strongest since the economy soared 8.3 per cent in the final quarter of 1999.

But economists said the figures were slightly deceptive. "Without inventory restocking by firms, the figure would have been less than three per cent, and we expect the pace of growth to slow to somewhere between 3.0 and 3.5 per cent over the full year," said Erik Narland, economist at CDC-IXIS Capital Markets in Paris.

When US consumer confidence data was released an hour later, European stock markets gave up the ghost and slunk back into the negative territory they had occupied for most of the session and most of the week.

The University of Michigan`s final consumer sentiment index for April fell to 93.0 from 95.7 in March, reverting back to its January level. Forecasts were for a reading of 94.5.

Vodafone lost 2.8 per cent and Germany`s Deutsche Telekom dropped 3.8 per cent as the week`s telecom gloom deepened.

The DJ Stoxx telecoms index flirted with a lifetime low of 244.22 points earlier in the week as jitters, initially sparked by Nordic telecom equipment makers Nokia and Ericsson, plagued the sector.

German chemicals giant Bayer was another of the day`s big losers, dropping 2.5 per cent.

The company posted a drop in first quarter operating profit that was in line with expectations, but again visibility was the problem. It said it could not give a reliable forecast for its operating business in 2002 due to global economic uncertainty.

Yesterday`s retreat was by no means limited to TMT stocks. More than 30 of the 50 components of the Euro Stoxx 50 recorded losses in a broad market retreat which sucked in financials, oil majors, insurers and consumer cyclicals.

On the plus side, Deutsche Bank and Anglo-Dutch consumer products giant Unilever ended the day as Europe`s biggest winners before and after their respective earnings announcements.

Deutsche Bank jumped three per cent ahead of its earnings release on Monday, helped by a Financial Times report which said the company was set to close its loss-making units and announce further cost cuts.

"People are just hoping that management will come out with some positive news on the restructuring front," Aarts said. "Maybe their results will be a touch better than expected too."

Unilever rose 2.3 per cent in Amsterdam after it reported a 35 per cent rise in first quarter net profits and stuck by its earnings target despite sluggish sales growth.

Merrill Lynch`s Aarts said it remained a stock-pickers market as wary investors pick their way through contradictory earnings statements and confusing economic numbers.

"We`ve picked up some pharma stocks because they appeared cheap and some of the cyclical stocks like the miners which have come back around 20 per cent on average since their huge rally," he said.

Next week brings more big results announcements, particular from the banks and defensive stocks.

Deutsche Bank, Dutch bank ABN Amro, Europe`s biggest company BP and Royal Dutch/Shell are on due to give figures.