Eurostocks ease in glitch-hit trade, Vivendi falls

European stock markets opened their weekly account with falls yesterday as holidays, technical problems and evidence of the tepid nature of the US economic recovery ate away at investor enthusiasm.

Dealings in Paris, Amsterdam and Brussels were suspended for almost two hours due to technical glitches at pan-European exchange Euronext.

When they resumed, sentiment was hit by the US Conference Board`s index of leading economic indicators, which fell for the first time since last September and was worse than expected.

"A lot of people are on holiday and of course our exchange was out of action for half the day which didn`t help," said Lex Werkheim, European fund manager at Eureffect asset management in Amsterdam. "Volumes have been terribly low."

"We were quite bullish until we got those lousy lead indicators from the United States and that set us back a bit."

By 1612 GMT, with Frankfurt the only European bourse still active, the FTSE Eurotop 300 index of pan-European blue chips was 0.56 per cent lower, in the bottom half of its six-month trading range.

The narrower DJ Euro Stoxx 50 index lost 1.02 per cent after having pushed higher during the morning.

French-American heavyweight Vivendi Universal was the day`s biggest blue-chip decliner, ensuring the DJ Stoxx media index finished as the biggest sectoral decliner.

Insurance, banking and technology stocks were also weak. On the upside, British mobile phone giant Vodafone and Anglo-Swedish drugs group AstraZeneca were the day`s biggest gainers while basic resources was the only sector which made any real headway.

Trade was equally lacklustre in New York, where renewed speculation of more al Qaeda attacks on the United States weighed on prices.

The Dow Jones industrial average lost 1.05 per cent, the broader Standard & Poor`s 500 Index eased 1.12 per cent and the tech-laden Nasdaq Composite gave up 2.23 per cent.

Strategists chose to focus on the back-end of the European earnings season in the hope that some of the blue-chip companies still to report will shake up the market.

"The volume levels are very quiet and trading is pretty subdued ahead of Deutsche Telekom`s results on Wednesday and Vodafone`s next week," said Michael O`Sullivan, pan-European strategist at Commerzbank.

Before that, Dutch telco KPN is due to report on Tuesday along with British music group EMI, British retailer Marks & Spencer, rumour-hit German financial services firm MLP and a handful of other companies.

"KPN might say they will fully write-down their investment in KPNQwest," said Eureffect`s Werkheim. "We`ve all seen what`s happening in Telco-land and we don`t see any improvement in the climate in the sector."

Vivendi`s fall knocked 3.3 per cent off its share price but dealers played down the fall, pointing out that it rose from multi-year lows last week and that volume traded in the stock was around 30 per cent of its daily average.

British duo CGNU and Prudential led a 1.3 per cent decline in insurance stocks while Spanish rivals BBVA and BSCH spearheaded a 1.1 decline in the banking sector.

Amond standouts, shares in German cosmetics firm Beiersdorf , the maker of Nivea cream, rose seven per cent despite denials from well-placed sources that France`s L`Oreal was ready to launch a 13 billion euro takeover of the company.

L`Oreal shares ended 1.1 per cent lower. Shares in Irish drug company Elan jumped nine per cent on market expectations it will shortly announce a major share buyback and restructuring programme.

Shares in Germany`s MLP bounced 12.9 per cent after falling around 30 per cent at the end of last week when a magazine published a report, denied by the group, that earnings had been inflated by using reinsurers to finance the initial costs of life policies.

Dealers said yesterday`s rebound was in part due to expectations of solid results today.

Shares in Finnish lift and escalator maker Kone sank 11.3 per cent after it moved to broaden its product portfolio by bidding for truck and tractor company Partek. Partek shares rocketed 21.8 per cent.

AstraZeneca`s 1.2 per cent rise came courtesy of a report that its experimental cancer drug Iressa shrinks the tumours in advanced lung cancer patients and alleviates their symptoms.

Eureffect`s Werkheim said Monday`s uninspiring trade, caused in part by the public Whit holiday in much of continental Europe, could be seen as a precedent for the summer.

"The upcoming summer will not bring a lot of people into this market," he said. "The old philosophy of `Go away in May` is still present in the minds of many people."