Emissions scandals hit Europe markets; tech woes knock Wall Street

Volkswagen's huge reserves for the diesel emissions scandal and a probe on emissions at Daimler hit European shares Friday while Wall Street suffered from new doubts about the tech sector.

Earnings season was bringing the reality of slow corporate earnings and revenue growth in a weak global economy back to markets which have rebounded in recent weeks from losses early in the year.

The Frankfurt market was hit when Volkswagen shares slid 1.3 percent as it announced its first quarterly loss in more than 20 years, setting aside 16.2 billion euros ($18.2 billion) to cover potential fines, lawsuits and recall costs in the diesel emissions cheating scandal.

Adding to the damage, Daimler, the parent of Mercedes Benz, lost 5.1 percent after reporting a 31 percent fall in profits and revealing that it was launching an internal investigation related to exhaust emissions following a US Justice Department request.

On the other side of the Atlantic, it was the disappointing quarterly results from tech giants Microsoft and Alphabet, the parent of Google, that spurred selling, though the main indices held up at break-even due to the support higher oil prices gave energy companies.

Microsoft lost 7.2 percent as its cloud business continues to fall short of expectations, and Alphabet tumbled 5.3 percent as its ad sales brought in lower returns.

Those disappointments spilled through tech shares, with Facebook losing 2.5 percent, Amazon 1.7 percent and Apple 0.3 percent.

The tech-heavy Nasdaq Composite ended the day off 0.8 percent, but the Dow managed a 0.1 percent gain as oil shares jumped with the price of crude.

Also keeping downward pressure on Wall Street were less than stellar results and dimmer forecasts from Caterpillar and American Airlines, but McDonald's earnings surged to herald the success of its "all-day breakfast" and other turnaround efforts.

"The market is basically trying to keep its head above water, but there are a lot of cross-currents," said Peter Cardillo, chief market economist at First Standard Financial.

The view was similar in Europe.

"The global markets look decidedly haggard this Friday, perhaps a tad overtired from their start-of-the-week surge," noted Connor Campbell, analyst at Spreadex traders.

- Emissions scandal widens -

In Japan, stocks were buoyed by a report that the Bank of Japan is mulling a new stimulus effort ahead of its meeting next week, specifically a move to essentially pay banks to borrow from it.

That news pushed the yen sharply lower, losing 2.1 percent against the dollar and 1.5 percent on the euro.

But automaker Mitsubishi Motors suffered another rout, capping a disastrous week that has seen its shares plunge more than 40 percent after the automaker's shock admission that it cheated on fuel-efficiency tests.

Europe's emissions scandal appeared poised to spread. A German probe found 16 major car brands -- ranging from France's Renault to Italy's Fiat and Japan's Nissan -- showed irregularities.

"Just as the VW fallout was beginning to come under some sort of control, Mitsubishi's admission has reignited fears of a more widespread problem," said Richard J Hunter, head of research at Wilson King Investment Management.

"Whilst there is no suggestion of any wrongdoing, the names of Daimler and Peugeot have also been dragged under the spotlight, with the obvious concern to investors that there may be more problems to come," he told AFP.

French auto giant PSA Group, the maker of Peugeot and Citroen cars, said Thursday its premises had been raided by France's anti-fraud squad as part of a probe into emissions.

- Key figures around 2200 GMT -

New York - Dow: UP 0.1 percent at 18,003.75 (close)

New York - S&P 500: UP 0.10 point at 2,091.58 (close)

New York - Nasdaq: DOWN 0.8 percent at 4,906.23 (close)

London - FTSE 100: DOWN 1.1 percent at 6,310.44 (close)

Frankfurt - DAX 30: DOWN 0.6 percent at 10,373.49 (close)

Paris - CAC 40: DOWN 0.3 percent at 4,559.66 (close)

EURO STOXX 50: DOWN 0.3 percent at 3,141.12

Tokyo - Nikkei 225: UP 1.2 percent at 17,572.49 (close)

Shanghai - Composite: UP 0.2 percent at 2,959.24 (close)

Hong Kong - Hang Seng: DOWN 0.7 percent at 21,467.04 (close)

Euro/dollar: DOWN at $1.1224 from $1.1288 on Thursday

Dollar/yen: UP at 111.80 yen from 109.50