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08/08/02 . By Deborah Cohen . Yahoo! News . U.S.A.
McDonald's, Wendy's Fall on Mad Cow Case
CHICAGO (Reuters) - Shares of McDonald's Corp. , YUM Brands Inc. and other U.S. fast-food chains serving beef products fell sharply in morning trade Thursday, after Canadian health officials reported that a Canadian man had died of the human strain of mad cow disease.
The man, who died in a hospital in Saskatoon, Saskatchewan, likely contracted the disease in the United Kingdom, Canadian Health officials said. Further details were not immediately available.
The market reacted quickly to news of the death, fearful that mad cow, a fatal brain-wasting disorder that has plagued cattle herds in Britain and other parts of the world, might have entered the North American food supply.
"We are in a very brittle market and any spook is enough to send trigger-happy investors to the exits," said U.S. Bancorp Piper Jaffray restaurant analyst Allan Hickok. "However, there are no known cases of origin in the Western hemisphere, especially in the United States."
The man, who has not been identified, died from a strain of the disease known as new variant Creutzfeldt-Jakob disease (vCJD). The disease is believed to be contracted by eating beef infected with mad cow, or Bovine Spongiform Encephalopathy.
Shares of major U.S. chains McDonald's, Taco Bell parent YUM! Brands, No. 3 U.S. U.S. hamburger maker Wendy's International Inc. and steak chain Outback Steakhouse Inc. were all sharply lower in early trade on the New York Stock Exchange, before modestly recovering.
Oak Brook, Illinois-based McDonald's, a member of Dow Jones Industrial Average, fell more than 5 percent to $22.10 from a close of $23.36 Wednesday. The shares were off 56 cents, or nearly 3 percent, to $22.80 at late morning.
"I think any correlation is pure speculation," McDonald's spokesman Anna Rozenich told Reuters. "This has nothing to do with McDonald's. We strongly urge anyone from jumping to conclusions on pure speculation."
U.S. cattle future prices at the Chicago Mercantile Exchange live cattle futures opened lower before the news, then weakened slightly before bouncing back. Prices at mid-morning were about one-half cent lower to 64.05 cents per pound.
"The only way that it would be a market factor was if he (the man) ate some beef in Canada and got sick," said Chuck Levitt, a livestock analyst with Alaron Trading Corp. The United States has prohibited the feeding of meat and bone meal products to cattle herds since 1997, a practice believed to contribute to the spread of the disease.
The U.S. Agriculture Department said on Thursday it was awaiting further details from the Canadian government on the case. No case
of BSE ( news - web sites) had before been identified in the United
States or Canada. About 115 cases have been reported in Europe,
mostly in Britain.