Europe Gets Pounded Again

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FRANKFURT -- European stocks continued to crumble as global fear about Russia, Asia and emerging markets in general deepened.

The biggest losers yet again were banks and companies whose profits are based on foreign sales.

Indices had bounced slightly from earlier lows, but were still wobbly. The

Xetra Dax

was down 174 points, or 3.3%, at 5072, while in London the

FTSE

was down 114, or 2.1%, at 5430 and in Paris the

CAC

was down 86, or 2.2%, at 3826.

Some smaller European markets suffered even larger losses. Austria was down 7.4% and Greece fell 7.7%.

Deutsche Bank

slipped 4.7%,

HSBC

dropped 4.7% and

Daimler-Benz

(

(DAI)

DAI ADR) gave up 4%. Software giant

SAP

(

(sap) - Get Report

SAP ADR) fell 7.6%.

In Russia, the government abandoned efforts to prop up the ruble, and trading again was suspended as panicky Russians deluged banks to try to buy dollars. Rumors also were flying that

Boris Yeltsin

was suffering from illness, and German Chancellor

Helmut Kohl

said Russia would receive no more international financial help unless it made crucial reforms.

Overnight in Asia, the

Nikkei

dived to a six-year low, ending down 452 points, or 3%, at 14,412.

The increasingly desperate global mood was painfully reflected in

S&P 500

futures, which were down 11.50 points at 1076.30, though they were off the session low of 1071.20. Safe-haven money continued to gush into German bonds and bund futures, as well as into U.S. Treasuries. The long bond was yielding 5.39%.

The dollar was weaker against the yen at 143.01, as the trading focus switched to mark/yen, and stable against the mark at 1.8067.

In Frankfurt, the

Dax

, which is especially sensitive to Russian problems, was hovering just above a major support level that, if broken, could spark a collapse and signal a bear market, traders and technical analysts said.

Plum Shipton, European equities analyst at

Merrill Lynch

in London, said global sentiment has fallen to dangerous levels despite some positive fundamentals, such as low rates, little inflation and an abundance of liquidity.

"I think the stock market probably has further to fall," she warned. Bargain hunters should be looking at defensive stocks, firms in fields such as retail and media whose profits come from domestic sales, she said.

Marcel Mussler, technical analyst at

DG Bank

in Frankfurt, was among those warning that Dax 5,000 was crucial. He predicted last week that no sustained rebound in the Dax was likely without first a test of the level, which was a low that held in April.

"The market will collapse if the Dax closes below 5,000," he said. "It is a very, very important level." The Dax dipped today as low as 5013.

The next support level is 4,450, he said. "There is nothing between 5,000 and 4,450," Mussler said. "Absolutely nothing."