Currency fears hit Europe Euro at new low, oil near highs trigger worries on interest rates, profits September 18, 2000: 12:19 p.m. ET

LONDON (CNNfn) - Nervousness about the outlook for earnings, inflation and interest rates combined to send most European markets sharply lower Monday, with both "new-economy" high-tech shares and more traditional manufacturing companies feeling the squeeze.

With inflationary pressures gathering in the form of near-record lows for Europe's common currency and oil prices at 10-year highs, concern resurfaced that the European Central Bank soon will hike interest rates. Stocks in the U.K., which doesn't use the euro, remained mostly unscathed.

In Paris, the CAC 40 index dropped 1.4 percent to 6,522.38, led by telephone equipment maker Alcatel (PCGE) with a slide of 4.5 percent. The high price of oil dented shares of manufacturers such as carmaker Renault (PRNO), falling 3.5 percent, and electrical engineering company Schneider Electric (PSU), which shed 2.9 percent.

Frankfurt's Xetra Dax index was down 1.1 percent at 6,921.22, with airline Deutsche Lufthansa (FLHA) among the leading losers, posting a drop of 3.3 percent as investors increasingly took a pessimistic view of the impact high fuel costs will have on profit. Other oil-dependent companies went out of favor on worries about raw material costs: among chemicals makers, Henkel [FSE:FHEN3] lost 3.5 percent and BASF (FBAS) fell 2.5 percent,.

London's benchmark FTSE 100 was the exception among Europe's main markets, ending the day at 6,410.2, little changed from Friday. High-tech firms suffered the most as Nasdaq's recent declines produced a hangover, but they were offset by gains in sectors from media to utilities.

The euro plumbed another record low, weakening to about 85 U.S. cents before recovering slightly to 85.26 cents. It had fetched 85.32 cents in late New York trading Friday.

http://cnnfn.cnn.com/2000/09/18/europe/markets_europe/

-- Martin Thompson (mthom1927@aol.com), September 18, 2000