Breaking News 3/13/07

TcoLog 0051 Version 1.00 03/13/07 4 Pages

Note: News on the Stock Market

Breaking NEWS!!!

U.S. concerns shake Europe markets

Reported from CNN.com

http://www.cnn.com/2007/BUSINESS/03/13/europe.shares.reut/index.html

LONDON, England (Reuters) -- European shares dropped on Tuesday and ended at the day's low as banks were rattled by concerns about their exposure to a troubled U.S. housing market and worries that growth in the U.S. economy will stall.

The pan-European FTSEurofirst 300 index closed unofficially down 1 percent at 1,466.97, marking the day's low after a morning retreat by U.S. shares gathered pace.

The DJ Stoxx European banking sector index fell 1.5 percent, with Barclays down 3 percent and Santander, Royal Bank of Scotland and Credit Suisse each down about 2 percent as banks on both sides of the Atlantic were unsettled by deepening troubles among U.S. subprime mortgage lenders.

Merger and acquisition activity and speculation continued to support selected stocks, however, including tobacco firm Altadis and UK retailer Alliance Boots.

Shares in confectionery firm Cadbury Schweppes leapt 10.5 percent after it said U.S. activist investor Nelson Peltz had taken a 3 percent stake, sparking talk he wants to split the company up to unlock value.

The FTSEurofirst's drop extended its slide to over 5 percent since Feb. 26.

Darren Winder, head of macro and strategy research at Cazenove, said the 6-12 month outlook for equities was positive due to rising earnings and attractive valuations, but markets could remain unsettled in the near future after the disruption of recent weeks.

"The nature of that disturbance, particularly the concerns about the U.S. economy, is a discussion that's going to linger, and while that nervousness is around I think markets will continue to be vulnerable," he said.

Problems in the troubled U.S. subprime mortgage sector deepened on Tuesday as New Century Financial said it underestimated its debt to Credit Suisse by $500 million, pushing New Century closer to bankruptcy.

Defaults among U.S. borrowers with poor credit have swelled, raising concerns about a wider impact on the economy.

British plumbing and heating equipment firm Wolseley was knocked 3.9 percent lower by fears that a U.S. housing downturn will hurt demand.

Across European exchanges, London's FTSE 100 index and Paris's CAC 40 both fell 1.2 percent and Frankfurt's 30 share DAX shed 1.4 percent.

Weaker-than-expected U.S. retail sales figures added to the trouble in the mortgage market to pull U.S. shares lower in early action. The Dow Jones industrial average was down 1 percent around the time of the European market close.

European insurance and other financial stocks dipped alongside banks, and drugs and oil sectors also slipped.

Brewer SABMiller shed 4.4 percent after it said Heineken's termination of its South African subsidiary's licence to manufacture and distribute Amstel Lager would cost it $80 million in profit.

But Altadis firmed 1 percent after a report it had been approached by UK rival Imperial Tobacco. Altadis said the report was "groundless".

Alliance Boots also bucked the gloom with a 2.1 percent gain on speculation Kohlberg Kravis Roberts may return with a higher offer after an initial approach was rebuffed.

"The arithmetic is very supportive for M&A activity," Cazenove's Winder said. "If you look at net debt relative to profitability, in aggregate terms equities look under geared...that is a theme that's going to remain with us."

What does this mean?

"It is going to make getting the kind of mortgage I want much harder.

This is not good." -DW Coon