European stocks hit by oil, earnings worries

LONDON, Oct 12 (AFP) - European stock markets closed lower Tuesday, pressured by record high oil prices, a weak ZEW reading of the German economy and a Philips warning that shook the tech sector.
The London FTSE 100 index shed 0.80 percent to 4,647.9 points, the Frankfurt DAX 30 dropped 1.28 percent to 3,966.48 and the Paris CAC 40 fell 1.04 percent to 3,688.73.
The DJ Euro Stoxx 50 index of leading eurozone shares declined 0.96 percent to 2,787.02 points.
The euro stood at 1.2311 dollars.
At London's close, the Dow Jones Industrial Average was off 39 points at 10,042.40, while US stocks were broadly lower as crude oil futures spiked above 54 dollars a barrel and chip stocks were pressured by a cautious outlook from Dutch consumer electronics giant Philips Electronics.
News that the ZEW German economic expectations index for October fell 7.1 points to 31.3 from 38.4 in September, against expectations for a drop to 36.0, also undermined sentiment as the eurozone's biggest economy continued to sputter.
Meanwhile, JP Morgan issued a negative sector note on British insurers, arguing that "high cost bases" were the main reason life insurance in Britain would show limited growth.
The broker reiterated its 'underweight' stance on Prudential, Friends Provident, and Legal and General, and its 'neutral' stance on Aviva.
Prudential fell 2.99 percent to 471 pence, Friends Provident lost 1.04 percent at 142.75, Legal and General dropped 1.72 percent to 101.25 and Aviva shed 1.68 percent at 557.5.
Among the rare FTSE gainers, retailer Marks and Spencer rose 1.31 percent to 347.50 pence after its second-quarter trading statement was in line with analysts' expectations.
European technology shares were under pressure after Dutch electronics giant Philips gave a downbeat forecast for two of its core markets, consumer electronics and semiconductors, dealers said.
Philips shares fell 3.1 percent to 18.39 euros in Amsterdam after the company forecast flat fourth-quarter sales at the semiconductors division and continued margin pressure in consumer electronics. The AEX index closed 1.33 percent lower at 329.97.
In Frankfurt, Infineon fell 2.72 percent to 8.24 euros, as Philips's downbeat fourth quarter outlook weighed on investors' minds ahead of Intel's quarterly data later Tuesday.
In Paris, STMicroelectronics was down 2.19 percent at 13.86 euros, Alcatel fell 2.15 percent to 9.99, Capgemini dropped 3.86 percent to 18.20 and Thomson lost 2.10 percent at 16.78.
Peugeot was the steepest Paris CAC 40 decliner, sliding 4.02 percent to 47.75 euros after Deutsche Bank cut its 2004 operating profit forecast for the auto maker to 2.2 billion euros from 2.4 billion, but retained a "buy" rating on the stock.
Elsewhere in Europe, the Swiss SMI index slipped 0.57 percent to 5,443.6 points.
The Brussels Bel-20 fell 1.0 percent to 2,731.48 and the Milan Mib 30 dropped 0.68 percent to 28,545.0.
The Madrid stock exchange was closed for a public holiday.
Rising oil prices had rattled investors in Asia, with the Tokyo Stock Exchange's Nikkei-225 index closing down 1.30 percent at 11,201.81 points and the Hong Kong Hang Seng Index off 0.40 percent at 13,251.59.