Renewed concerns over the higher costs of its asbestos liabilities put Swiss industrial group ABB under heavy pressure as the market also digested news that the chief financial officer was leaving.
ABB shares dropped 8.2 per cent to €17.30 as investors were unnerved by Friday's 40 per cent plunge in shares of US rival Halliburton after it reported a heavy asbestos-related damages liability.
"Asbestos is a key worry for ABB and we view it as a 'black box', given the few details we have on the subject," ABN Amro said in a note to clients. "Having said that, ABB has a different approach to asbestos cases than Halliburton. Indeed, ABB tries to settle everything out of court and avoid litigation. Halliburton was doing the reverse and has defended each individual claim."
Technology stocks, which gained more than 70 per cent over the past two months, continued to slip. Nokia was down 4.6 per cent to €27.23 and Alcatel down 3.7 per cent to €21.34. Mr Joe Rooney, global strategist at Lehman Brothers, said improved economic conditions had been benefiting cyclical stocks, of which techs were a key component, but following the sharp rises, "techs no longer look cheap".
Among the retreating techs, chip-makers were again in focus. STMicroelectronics fell 8.5 per cent to €36.19 as France Telecom and Finmeccanica said they would sell a 7 per cent stake in the Franco-Italian chip-maker. They hold 33.2 per cent between them.
The STM share placement deal, widely rumoured last week, involves a private placement of 60 million shares with an option to place another 9 million. Last Friday, STM fell 5 per cent on the rumours. France Telecom will use the proceeds to reduce some of its €65 billion debt. Its shares fell 1.7 per cent to €46.74.
