By Peter Starck
STOCKHOLM, July 22 (Reuters) - Nordic stocks fell for the third straight session on Monday, led by a steep plunge for diabetes care group Novo Nordisk , but telecoms major Ericsson bucked the trend with a cautious recovery.
Among lower-tier stocks in the news with the second-quarter reporting season in full swing, industrial conglomerate Norsk Hydro and steel group SSAB fell while aluminium profiles maker Sapa traded flat.
The Nordic region's top financial group Nordea , a European top-20 bank by market capitalisation, tumbled almost nine percent to near four-year lows amid widespread sector woes linked to accounting scandals and equity market losses.
The Stoxx Nordic index fell 4.2 percent, taking its accumulated losses this year to some 40 percent.
Monday's Nordic performance was marginally less bleak than that of Europe's top-300 index , which fell almost five percent.
"This is a fairly low-spirited market," one broker in Helsinki said.
"There's not a single sector that looks even relatively strong," said another. "There's no sector rotation...if anything, it is asset reallocation out of stocks and into cash."
Stockholm's blue-chip OMX index , which closed at 522.2 points compared with 846.5 at the end of 2001, could fall to 500 -- levels last seen four years ago -- before a bounce, said a broker Stockholm, home to the worst performing stock market in a G10 contry this year.
Copenhagen blue-chip Novo Nordisk hit a near three-year low of 167 crowns before recovering to close at 182 crowns, down almost 14 percent, after the company said it would suspend development of a product seen by analysts as a potential future sales growth driver.
BAD NEWS
"It's very bad news. It was one of Novo's most advanced products and analysts had high hopes for its future," said Michael Reeslev, portfolio manager at mutual fund Jyske Invest.
"It will have an adverse effect on the company's sales and earnings from 2005 and on," said Nordea Securities analyst Henrik Simonsen.
Norsk Hydro plunged 5.6 percent to nine-month lows after the world's number three aluminium maker said the outlook was weak and the strength of the Norwegian crown would work against it in future quarters.
Braving a shower of analyst downgrades, Ericsson advanced 0.8 percent in what market players said looked like a rebound from Friday's 18 percent slide after the global mobile telecom network systems leader posted a loss for the seventh quarter in a row, reported weak order inflow, downgraded its forecasts and unveiled the terms of its $3.25 billion rights issue.
Ericsson rival Nokia , the world's leading maker of mobile phones, fell six percent.
But brokers said Nokia, which was bruised last week after the group posted in-line earnings but gave a cautious outlook was holding up relatively well in the weak environment.
Among forestries, hit by the dollar's fall and the euro's appreciation, the world's biggest paper and board maker Stora Enso , which is to report interim results on Wednesday, fell 3.4 percent to 10-month lows.
Brokers say forestry stocks are set to fall whatever the companies' results, considering their strong performance in the past year when techs have tumbled.
But some analysts say the euro would have to strengthen significantly more versus the dollar for the Nordic papermakers' competitiveness to be eroded.
(Additional reporting by Helsinki newsroom, Copenhagen newsroom, Oslo newsroom)