Updated from 11:35 a.m. EDT

The Goodyear Tire & Rubber Co.

(GT) - Get Report

said the falling euro, rising energy costs and a weak tire market would hamper its earnings for the second half of 2000.

Goodyear said at best it will break even or report a small loss in net income for the third quarter, with similar results in the fourth quarter. It had expected to top its results in last year's third quarter, when the company earned 69 cents a share, the company said in a statement.

"The economic outlook for the tire industry is difficult at best," said Samir Gibara, chairman and chief executive officer of Goodyear.

Goodyear finished Thursday regular trading down $2.88, or 14%, at $18.13.

The Akron, Ohio-based company's North American business has benefited from the

Bridgestone/Firestone

recall as consumers have selected Goodyear tires as replacements, the company said. "Global economic and industry conditions, however, have deteriorated even beyond Goodyear's most pessimistic assumptions, preventing the benefits from flowing to the bottom line," according to a company statement.

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Thursday's announcement follows a warning

released in June that warned of a shortfall in second-quarter earnings, and hardly came as a surprise to most analysts who follow the company, many of which had already lowered their estimates.

"They're in the cross hairs between everything that's going wrong in the automobile industry," said Nicholas Lobaccaro, an analyst at

Lehman Brothers

. "While they may benefit from Firestone, there's 10 other things going wrong."

Lobaccaro rates Goodyear a three, which in this case, he said, means sell. His firm has no underwriting relationship with the tire company.

Goodyear said it expected raw material and energy costs to stabilize in the second half of 2000, but they continued to escalate. The company's raw material costs have risen over 3% since June and about 10% for the year. Oil-derived products, which can make up about 25% of the cost of a tire, are at 10-year highs. Energy costs, especially natural gas, are

up 20% since the beginning of the year and expected to increase further.

Compounding these higher costs are currency movements in Europe, where the euro fell to an historic low of 84 cents. The euro's value vs. the U.S. dollar has dropped 16% this year, and 28% since its inception in 1999. The company had expected a euro-dollar exchange rate of 94 cents for the second half of 2000.

In response, Goodyear said it reduced third-quarter tire production,

The company is scheduled to release third-quarter earnings on Oct. 24.