Aug. 21 (Bloomberg) -- Shares of ABB Ltd., Europe's largest electrical-engineering company, fell as much as 9.5 percent after a U.S. court delayed its $1.3 billion settlement of asbestos claims.

``There's no point in proceeding,'' said David Bernick, a lawyer for Zurich-based ABB. ``The full benefits of the plan cannot be realized until the appeal is resolved.'' Both sides must file their court papers in less than 60 days, he said.

The 3rd U.S. Circuit Court of Appeals in Philadelphia ordered ABB to halt the settlement, which includes the bankruptcy of its Combustion Engineering Inc. unit, pending an appeal, said Elizabeth Magner, a lawyer for opponents of the plan.

ABB has been counting on the settlement to clear the way to sell an oil, gas and petrochemicals unit that's the target of some of the asbestos lawsuits. After $1.5 billion in annual losses in two years, the Swiss company needs proceeds from unit sales to reduce debt that rose to $8.3 billion last quarter.

The company's shares dropped as much as 71 centimes to 6.75 francs and were trading at 6.8 francs at 9:05 a.m. in Zurich. Goldman, Sachs & Co. analysts cut their rating to ``in line'' from ``outperform.'' The stock lost 5.6 percent yesterday, when Bank Leu AG cut to ``sell'' from ``hold.''

The delay to the settlement prompted concerns over the sale of the oil business, some analysts said.

Sale of Business

``The most important question is whether the oil, gas petrochemicals division can still be sold or whether it will be delayed,'' said Mark Diethelm, a Zuercher Kantonalbank analyst with a ``market perform'' rating on the shares. ``The next questions is: Will the $1.3 billion be enough to settle the claims or will ABB have to raise its offer?''

Telephone calls and e-mails to ABB spokesman Wolfram Eberhardt seeking comment weren't immediately returned.

ABB is in talks with J.P. Morgan Chase & Co.'s JPMorgan Partners and private equity firms Candover Plc and 3i over the sale of the oil-equipment unit for about $1.1 billion, people familiar with the situation have said. The sale hinges partly on a successful asbestos settlement, ABB has said.

``A few opponents are trying everything they can to stop this, but ABB is still on track,'' said Andreas Riedel, a Bank Sarasin & Cie. analyst with a ``neutral'' rating on ABB. ``The opponents could take this thing, in theory, all the way to the U.S. Supreme court, but their chances of winning are minuscule.''

The settlement would resolve lawsuits over asbestos from boilers made by Norwalk, Connecticut-based Combustion Engineering from the 1930s to the 1960s. A bankruptcy judge and U.S. district court judge approved the plan last month.

While lawyers for 111,000 plaintiffs support the settlement, it's opposed by a group of 280 claimants and some insurers.

``To pay certain people a greater share'' of the company's assets ``offends the bankruptcy code,'' said Magner, who represents cancer victims who feel they are being short-changed.

Last Updated: August 21, 2003 03:05 EDT