Feb. 4 (Bloomberg) -- European stocks slid, paced by technology companies including Alcatel SA and Ericsson AB, after U.S. network-equipment maker Cisco Systems Inc. said customers aren't spending as much as it expected.

Automakers slipped after DaimlerChrysler AG, which releases earnings today, and Volkswagen AG reported declines in January U.S. sales for some of their models. Bayer AG led the drop on the Dow Jones Stoxx 50 Index amid concern that generic drug competition is increasing.

The Stoxx 50 shed 0.4 percent to 2685.74 at 11:39 a.m. in London. The Stoxx 600 lost 0.4 percent, with technology companies and carmakers leading declines. The Euro Stoxx 50, a measure for the 12 countries sharing the euro, dropped 0.7 percent.

``Expectations are high,'' said Andre Koettner, who manages a technology fund as part of the $137 billion he helps oversee at Union Investment GmbH in Frankfurt. ``Earnings results that are just good aren't enough to drive stocks higher. Cisco's results are a burden on the market today.''

Technology companies have led gains on the Stoxx 600 this year, adding to a 34 percent rise for the benchmark's technology index in 2003, on optimism a global economic recovery will prompt businesses to replace older equipment. Cisco Chief Executive Officer John Chambers said on a conference call yesterday that CEOs are ``still more cautious'' on their capital spending.

Shares of Cisco, the world's largest maker of equipment to link computers, lost 4.4 percent to $25.25 in German trading.

Shares Drop

Alcatel, the world's biggest maker of broadband Internet equipment, declined 4 percent to 12.62 euros. Ericsson, the largest maker of wireless networks, slid 2.4 percent to 16 Swedish kronor. Siemens AG, which also makes network equipment, fell 0.9 percent to 64.40 euros.

Benchmark indexes fell in 12 of the 17 Western European markets open today. Germany's DAX Index decreased 0.9 percent and the U.K.'s FTSE 100 Index declined 0.2 percent. France's CAC 40 Index shed 0.7 percent. March futures on the Euro Stoxx 50 lost 0.6 percent to 2830.

DaimlerChrysler, the world's largest maker of luxury cars, slid 1.8 percent to 36.65 euros after the company said U.S. sales of its Mercedes Car Group fell 3.1 percent last month on lower demand for the M-Class and S-Class models.

The company is expected to say later today that fourth- quarter earnings surged to 1.46 billion euros ($1.8 billion) as a one-time gain from the sale of a unit outweighed falling revenue at its Chrysler division, according to the median estimate of 14 analysts surveyed by Bloomberg News.

Sales Decline

Volkswagen, Europe's largest carmaker, dropped 1.2 percent to 38.53 euros. The company said North American sales fell 26 percent as demand for the Passat model slid.

Bayer, Germany's second-biggest drug and chemical company, shed 3.4 percent to 23.31 euros. Its Avelox antibiotic may face a cheaper copycat competitor in the U.S., the Food and Drug Administration said on its Internet site. An undisclosed rival has filed an application to sell a 400-milligram version of the treatment, the agency said. The drug had sales of about $351 million in 2002, according to Lehman Brothers analysts.

Companies dependent on U.S. sales fell today on speculation Group of Seven finance ministers and central bankers meeting this week will fail to agree on a plan to halt the dollar's yearlong slide. The dollar traded at $1.2548 per euro, from $1.2543 yesterday, when it had its biggest drop in a week. It has lost 14 percent against the euro in the past year.

Japan's Nikkei 225 Stock Average shed 1.8 percent today, its biggest drop since Dec. 16, led by the exporters Toyota Motor Corp. and Fuji Photo Film Co.

Exporters Slip

SAP AG, a software maker that gets more than a quarter of its sales from the U.S., fell 1.6 percent to 131.22 euros. Infineon Technologies AG, a German semiconductor company that generates about 23 percent of revenue from the U.S., dropped 2.1 percent to 11.94 euros.

France Telecom SA, Europe's second-biggest phone company, dropped 4.4 percent to 22.68 euros. The company said fourth- quarter sales fell 4.7 percent to 11.62 billion euros, hurt by the euro's gain against other European currencies and lower demand for domestic fixed-line calls. The median forecast of five analysts surveyed by Bloomberg News was for fourth-quarter sales of 11.97 billion euros.

Roche Holding AG, the world's largest maker of cancer medicines and diagnostic tests, fell 1 percent to 128.25 Swiss francs. The company said profit from continuing operations rose to 3.29 billion Swiss francs ($2.63 billion), less than the median of 3.46 billion francs expected by five analysts surveyed by Bloomberg News.

Ryanair Holdings Plc, Europe's biggest low-cost airline, climbed 3.8 percent to 5.15 euros. The company had the recommendation on its shares raised to ``buy'' from ``hold'' by Lars Slomka, an analyst at Deutsche Bank AG in Frankfurt.

Enel Upgrade

Enel SpA, Italy's largest power supplier, climbed 1 percent to 5.94 euros. The company's shares were upgraded to ``buy'' from ``hold'' by Citigroup Smith Barney.

Europe's fourth-largest power producer said yesterday following the official close of trading that cost-cutting should offset an expected 4.3 percent decline in electricity distribution sales in Italy this year after the industry regulator issued new rules for setting rates.

Veolia Environnement SA, the world's biggest water utility, slipped 2.3 percent to 22.47 euros after saying fourth-quarter sales fell 4.7 percent to 7.55 billion euros, hurt by the dollar's decline against the euro and after the company sold businesses with about 2 billion euros in revenue.

Alcatel SA (CGE FP)
Bayer AG (BAY GY)
DaimlerChrysler AG (DCX GY)
Enel SpA (ENEL IM)
Ericsson AB (ERICB SS)
France Telecom SA (FTE FP)
Infineon Technologies AG (IFX GY)
Roche Holding AG (ROG VX)
Ryanair Holdings Plc (RYA ID)
SAP AG (SAP GY)
Siemens AG (SIE GY)
Veolia Environnement SA (VIE FP)
Volkswagen AG (VOW GY)

To contact the reporter on this story: Balduin Hesse in Frankfurt at bhesse2@bloomberg.net.

Last Updated: February 4, 2004 06:46 EST