Eurostocks turn lower, Wall Street sags

European shares turned lower yesterday afternoon after Wall Street tumbled in opening trade as Iraq war fears simmered, but consumer products group Unilever advanced on bullish earnings comment.

Insurers also did well, with Sweden's Skandia leaping on takeover hopes, but the region's advance was trimmed by opening losses on Wall Street.

At 1503 GMT, the FTSE Eurotop 300 index of pan-European blue chips was down 0.28 per cent at 803 points, its eighth consecutive session of losses, dragging the benchmark near to last October's five-and-a-half-year low.

Advancers and decliners were almost evenly matched in steady volume.

Investors are braced for a key report by UN weapons inspectors on Monday and President George W. Bush's State of the Union speech on Tuesday, which many fear will be a call to arms, sending investors scurrying.

"It reflects the fact that the uncertainty, cost and timing of war is the greater problem than the actuality of war and what the aftermath will be," said Robert Kerr, European strategist at Bank of America.

"I see the market oscillating with volatility back at high levels, and we are going to bump into territory where there are forced sellers," Kerr said.

The sharp drop in the dollar to a three-year low against the euro had also neutralised the beneficial effect of the 50 basis points interest rate cut by the Federal Reserve late last year.

The DJ Euro Stoxx 50 index shed 0.6 per cent to 2,256 points. On Wall Street, the Dow Jones industrial average was off 1.5 per cent at 8,240 points, while the tech-laden Nasdaq Composite was down 1.7 per cent.

Anglo-Dutch consumer products group Unilever rose 3.8 per cent to 53.40 in Amsterdam after the company's chief executive, Antony Burgmans, told a conference that 2002 sales growth for its top brands would eclipse 2001 levels.

Shares in Swedish financial group Skandia jumped after news that Finnish bancassurer Sampo had raised its stake in Skandia to above five per cent, but said it was not planning a takeover.

Despite Sampo's move to quash talk of a takeover, shares in Skandia rallied eight per cent to 21.20 Swedish crowns.

The insurance sector was also lifted by Britain's Legal & General after investment bank Dresdner Kleinwort Wasserstein raised its rating on the stock to "buy" from "add", sending the shares up 4.7 per cent to 82.18 pence.

Legal & General said that global sales of its life, pension and investment policies rose 13 per cent in 2002, following solid sales figures from domestic peers Aviva and Prudential in the last week.