LONDON -- European markets sailed into a sea of red as the cost of the third-generation mobile phone licenses in Germany continued to rise and telecom stocks fell.
fell below the 6500-point level and by midmorning the index stood down 39.8 points at 6492.20.
Telcos were dragged down by
, which shed 28p to 795 as it confirmed that it will take control of its German joint venture
. It seems that its erstwhile partner in the venture,
, did not want to put up the cash for the 3G license that Viag Interkom is bidding for.
was also under pressure because of the concerns about escalating prices for the licenses. Vodafone shares slipped 9.5p to 272, enough to wipe around 26 points off the FTSE 100. Vodafone has consistently stated that the sale of
will cover its costs, but investors have no doubt focused on
downgrade of its March 2001 price target on Vodafone from 450p to 425p.
However, the research is not as bad as it first seems. "We believe this period of negative sentiment is reaching its conclusion and believe that investors should be taking advantage of current weakness to build positions in this must-own stock," the bank says. It also claims that the company is, "arguably the best positioned telco on a global basis".
Elsewhere in the sector,
plunged 84p to
18.51 ($27.74) to lead the FTSE 100 losses, and
Cable & Wireless
lost 27p to
On the Continent, E.ON fell 2.45 euros to 56.50 ($51.54) and
fell 1.22 euros to 45.69.
dropped 12 euros to 105 and its bidding partner in the mobile auction,
, was down 3.30 euros at 136.00.
The weakness fed though to phone makers.
was down 0.60 at 81.10 while
was marginally lower at 43.06 euros.
Europe's other stock markets were also lower. The
in Paris was down 58 at 6626 and the
in Frankfurt was down 59 at 7256. The
index was down 56 at 5168.