FRANKFURT -- Stocks stumbled modestly on concern profits will suffer as emerging-market troubles return.

Today, the emerging-market focus was on China after a weekend report in the state-run

China Daily Business Weekly

that a devaluation of the yuan might not be a bad thing.

A Chinese central bank spokesman said the newspaper story did not reflect the bank's point of view. Nonetheless, the story, combined with continued Brazil and Latin America worries, spooked some investors. Some were cutting exposure to stocks -- especially banks -- and moving into the safety of European bonds, whose yields hit record lows.

HSBC

, which has extensive exposure to Asia, dropped 4%, and

UBS

fell 2.4% after cutting its earnings forecast for 2002 by 10%.

Societe Generale

slid 2.5%.

In Frankfurt, the

Xetra Dax

was down 44 points at 4963, while in London the

FTSE

was down 22 at 5839 and in Paris the

CAC

was off 6 at 4012.

By early afternoon, most indices had bounced off morning lows, but appeared wobbly ahead of Wall Street's open.

S&P 500

futures were down 1.70 points at 1230.30. The dollar remained stable at 114.43 yen, and the euro was flat at $1.1585. The U.S. long bond was yielding 5.09%.

Thomas Teetz, equities strategist at

HSBC Trinkaus

in Dusseldorf, said he would not be a buyer of stocks under current conditions, adding that he expects earnings outlooks to be slashed in coming weeks. "The whole market is a little bit risky at the moment," he said.

An earnings disappointment this morning knocked down shares of German chemical and metals group

Degussa

, which slipped 6% after reporting that first-quarter pretax profits dropped 9%.

In merger news,

General Motors

(GM) - Get Report

is discussing buying 50% of

Volvo

(VOLVY)

, according to a story in the financial newspaper

Dagens Industri

. Volvo was down 1.8%.

Going against the overall market trend today was German business software firm

SAP

(SAP) - Get Report

, whose shares rose 5.2%. SAP reports 1998 results Tuesday. But SAP has already issued a profit warning and investors seem to be betting that the company will pull no further surprises tomorrow.