March 25, 2003	Tuesday	Muharram 21, 1424

LONDON, March 24: European share prices lurched lower on Monday as jitters about how long the war in Iraq might drag on put the brakes on a recent rally.

The British FTSE 100 index of leading shares dropped 3.05 per cent to 3,743.3 points, the German DAX 30 index slumped 4.92 per cent to 2,581.5 points in late trades and the French CAC 40 index gave up 5.67 per cent to 2,726.85 points.

The DJ Euro Stoxx 50 index shed 4.39 per cent to 2,129.3 points in late trades.

As most European markets closed, the Dow Jones Industrial Average had shed 3.07 per cent in New York, while the tech-rich Nasdaq index was off 2.95 per cent.

World stock markets had soared ahead and during the early stages of the US-led invasion of Iraq amid hopes of a swift end to the war.

But stocks retreated after US-led forces suffered casualties in their push toward Baghdad over the weekend and Iraqi television showed raw images of captured and dead US troops.

There was a mixed picture in Asia, where share prices rallied 2.9 per cent in Tokyo as traders caught up after a Japanese public holiday on Friday.

But shares fell 0.8 per cent in Hong Kong, reflecting fears about progress of the US-led war in Iraq, dealers said.

In Paris, a dealer said: “Sentiment is going to be pretty negative now until the troops take on a major city in Iraq and make a dent in Saddam’s army.”

“For the moment people are shorting and buying back on the weakness. A lot of investors just don’t want to stick their necks out, in case they get their fingers burned,” he added.

In the absence of any economic pointers to provide alternate directions, all eyes were focused on the Gulf and related comments by western leaders.

In a statement to the House of Commons, British Prime Minister Tony Blair said US-led forces are now about 60 miles south of Baghdad and close to engaging Iraqi Republican Guard units defending the capital.

Blair said that while thousands of Iraqi soldiers have surrendered, forces close to the regime of President Saddam Hussein “are resisting and will resist strongly”.

“There are bound, therefore, to be difficult days ahead, but the strategy and its timing are proceeding according to plan,” he added.

In Paris, France Telecom stock slipped 1.0 per cent to 20.00 euros, but was nonetheless off heavier losses earlier in the day as investors bought shares to secure warrants granting access to the operator’s long-awaited 15-billion-euro capital increase, dealers said.

France Telecom announced its capital increase early in the day, saying it will attribute one warrant for each share held as of the close of trading on Monday.

“The stock is coming back up because you have to own the shares tonight in order to profit from the warrants,” one trader said.

Analysts at Aurel Level said the capital increase will “by nature resolve a great deal of the company’s current difficulties”.

In Amsterdam, the AEX index plunged by 6.38 per cent to 260.34 points, the Swiss SMI was off 5.0 per cent at 4,230.7 points, in Milan the Mib 30 fell 2.92 per cent to 22,507 points, in Madrid the Ibex-35 lost 4.04 per cent to 6,005 points, and in Brussels the Bel-20 closed 4.30-per cent lower at 1,688.51 points.—AFP