London techMARK opens lower after jobs data hits Nasdaq

Technology shares started Friday with the traditional end-of-the-week torpor exacerbated by the prospect of a three-day weekend, with the main direction coming from last night's slide on the NASDAQ, dealers said.

At 9.14 am, the London techMARK 100 index was down 14.87 at 2,027.39, having briefly penetrated positive territory on early strength in higher-capitalised stocks.

But screens soon turned red, with market breadth decidedly negative and 3 fallers to every gainer - although about 40 of the techMARK 100's constituents remained unmoved.

New York's trading on Thursday was heavily impacted by economic data which pointed to continuing fragility in the U.S. economy, dealers said, after the jobless claims report showed a rise in unemployment rather than the fall most observers expected.

At the same time, a private survey showed job cuts were at record levels, putting the market on edge ahead of today's U.S. non-farm payroll figures due later today.

At the close, the NASDAQ Composite was down 74.40 points or 3.4% at 2,146.20.

The end result was broad-based losses, with PC makers leading the way down.

Dell slid after a massive recall of nearly 300,000 laptop batteries which - the company said - may be at risk of bursting into flames, coupled with a UBS Warburg downgrade which warned of pressure from the current price war in the PC market.

Hewlett-Packard, IBM, Gateway and Compaq followed suit, along with Apple as dealers took profits from gains on its new consumer iBook laptop launched on May Day.

Chip stocks saw downgrades at Tucker Anthony Sutro for equipment vendors Applied Materials and Novellus, forcing the share prices down as the broker said the valuation model "points to significantly lower share prices for industry leaders as revenues (and) margins are expected to decline for several quarters".

Vitesse also fell back, after having announced a one-off charge and sweeping job cuts after the bell on Wednesday. With the overall sector weak, the Philadelphia semiconductor index (SOX) slid 23.58 to 647.07.

And elsewhere, Palm and Handspring both lost ground in the wake of a cautious note from Lehman Brothers that predicted pricing pressures in the segment - although Palm told a JP Morgan H&Q technology investor conference that it has no near-term plan to raise capital in the capital market.

Sun shares, meanwhile, traded down despite reassurance yesterday on its 15-pct full-year sales growth estimate, saying at the same time that it expects little negative impact from the second-hand market in its equipment following the demise of internet start-ups.

Lucent was a faller amid ongoing speculation about its fibre-optic unit - Pirelli is now also a bidder, probably along with Corning and Alcatel - and the arrest of three employees for allegedly trading company secrets for their own commercial gain.

Among the internet stocks, AOL Time Warner and Yahoo both fell as they were reiterated a 'buy' by Lehman Brothers, who said recent strong gains would likely see the stocks trade in a range until profits begin to show signs of acceleration.

Asian markets again were without Japan, whose Nikkei 225 was closed for the final working day of the Golden Week holiday.

Hong Kong's Hang Seng tracked the Nasdaq down, ending the morning 274.21 points lower at 13,443.93 as weakness in global telecoms stocks saw Pacific Century CyberWorks, Hutchison Whampoa and China Mobile on offer.

In London, wafer-thin trading saw software and IT stocks share centre stage after a week dominated by telecoms.

CMG began the day in demand after the Guardian, among others, voiced speculation that it could follow competitor Sema into the status of bid target. But demand soon waned amid the general downward pressure, with CMG weaker by 12 at 393.

Sage Group was gaining, 1 stronger at 278 ahead of its interims next week and in spite of a Teather & Greenwood reiterated 'sell'. But Dimension Data slid 12 to 328, while Baltimore - described in the Guardian as one to avoid - dropped 2 to 86.

Surfcontrol dropped 17-1/2 to 707-1/2 amid controversy about whether its plans to withdraw, revalue and reissue options following heavy share price falls are fiscally legitimate, Logica was off 38 to 920 and Misys continued to spiral down from its 600 pence resistance level, losing 21 to 556.

Telecoms continued to hog the limelight, though, as Goldman Sachs reiterated Vodafone's long-standing place on its recommended list. The mobile giant - fresh from its £3.5bn placing and facing the risk of significant stock overhangs from acquisition-linked lockups expiring in the next month or two - added 1-3/4 to 191 while arch-rival Orange was rated a 'market outperform' in an inaugural Goldman note with a 12-14.5 euro price target.

The broker said Orange, second to Vodafone in Europe, faces problems such as customer retention costs, but nonetheless looks likely to be one of the "five or so winners that survive the phase of consolidation". Orange slipped 9-1/2 to 691-1/2, dropping below 700 for the first time in two weeks.

In the broader sector, Goldman simultaneously upped its weighting to overweight from neutral for telcos across Europe. But this had little effect in the UK, with Cable & Wireless down 7-1/2 to 492-1/2, Colt losing 71 to 885 despite a 'buy' ahead of first quarter numbers on May 10 from Deutsche Bank, and Energis down 23-1/4 to 305-3/4.

British Telecom, meanwhile, was subdued, slipping 1-1/2 points to 589 as UK regulator Oftel ditched an anti-trust investigation of its unmetered pricing plans.

Vendors, meanwhile, continued to head downwards following the U.S. lead, with Marconi off 10 to 394, Bookham down 5 to 340 and Filtronic losing 7-1/2 to 265.

In the chip sector, U.S. weakness encouraged the downward drift, with ARM Holdings down 6 to 377, Parthus drifting down 3 to 96 and ARC International dropped 4-1/2 to 98-1/2 as Nomura, the chipmaker's second biggest shareholder, has sliced its stake nearly by half.

The sale follows lock-ups expiring on at the end of March on nearly 53% of ARC's stock, with early investors now able to sell.

In the small caps, the dismal tale of Bright Station continued, with the group now down to a market capitalisation of about £18m - far below the 30m required for a convertible bond issue to come off. The persistent selling follows news late on Wednesday that the company's cash position - already known to be perilous - is even worse than previously feared, with less than £3bn left.

Since at current spending rates that probably amounts to less than a month left till the coffers are dry, Bright Station slid 1 to 10-3/4.