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European stocks ring up losses after Ericsson profit warning

LONDON - Europe’s main stock markets were lower Tuesday after investor sentiment was hit by a profit warning from Swedish telecommunications equipment maker Ericsson and record high oil prices.

London’s FTSE 100 index of leading shares fell 0.48 percent to 6,612.30 points, the Paris CAC 40 shed 0.83 percent to 5,759.03 and Frankfurt’s DAX 30 lost 0.36 percent to 7,941.06 points.

The Euro Stoxx 50 index of top eurozone shares slid 0.63 percent to 4,406.96 points.

The euro stood at 1.4160 dollars.

Wall Street took a beating on Monday from record-breaking oil prices and a weak earnings report from Citigroup.

Crude prices continued their record-breaking run on Tuesday, striking close to 88 dollars per barrel in New York amid fears over tensions between Turkey and Kurdish rebels, dealers said.

High oil prices eat into corporate profits and raise investor concerns about global economic growth.

In Europe, Sweden’s Ericsson announced that third-quarter earnings would be lower than anticipated due to an unexpected drop in revenue from mobile network expansions.

After the profits warning, Ericsson shares plunged 28.7 percent to 18.8 Swedish kronor on the Stockholm stock exchange.

The news sent rival European telecoms reeling. Alcatel-Lucent shares tumbled 5.22 percent to 6.54 euros in Paris and Deutsche Telekom shed 1.11 percent to 13.37 euros.

In London, Vodafone lost 1.08 percent to 174.4 pence.

‘Ericsson has certainly put the wind up us,’ said Howard Wheeldon, equities strategist at BGC Partners.

‘Any unanticipated announcements always have the same effect. Markets do not like to be surprised.’

Wheeldon said investors were certainly taking note of the spike in oil prices, although it does not have the same impact on markets as in the past.

‘We’re jaded because we have been living with high prices for some time.’

On Monday, the Dow Jones Industrial Average tumbled 0.77 percent to close at 13,984.80 and the Nasdaq composite slid 0.91 percent to 2,780.05.

The broad-market Standard and Poor’s 500 index fell 0.84 percent to 1,548.71 points.

In Asia on Tuesday, Japanese share prices closed sharply down amid renewed concerns about the fallout from problems in the US mortgage sector, dealers said.

The Tokyo Stock Exchange’s benchmark Nikkei-225 index of leading shares tumbled 1.27 percent to 17,137.92 points.

Hong Kong’s key Hang Seng Index lost 2.0 percent at 28,954.55 points.