Media and autos spearheaded a broad retreat in European shares yesterday afternoon, with Wall Street mixed after a sharp fall in housing starts triggered worry about the resilience of US consumers.
Shares in debt-laden Getronics lost a quarter of their value after the group, one of the three biggest European information technology firms, sought to dampen fears of a cash crisis.
By 1457 GMT, the FTSE Eurotop 300 index was down one per cent at 901 points, with advancing issues outpacing decliners by more than two-to-one on modest volume.
The DJ Euro Stoxx 50 index shed 1.4 per cent to 2,514 points. The market's rally since mid-October ran into the sand as worry over the economy and possible war against Iraq countered some bright spots in the corporate earnings picture.
"The only bit of catalyst can come from two sources - the European Central Bank and if they cut interest rates, and the other is complete resolution for Iraq. But on both accounts it's not terribly hopeful," said Khuram Chaudhry, a strategist at Merrill Lynch.
"There is concern about earnings downgrades and where does that lead. As we approach the end of this year and lead into next year, there is still very much a question mark if the global consumer will hold up," Chaudhry said.
On Wall Street, the Dow Jones Industrial Average eased 0.3 per cent to 8,449 points, while the Nasdaq Composite rose 0.5 per cent.
US housing starts fell 11.4 per cent in October, erasing a big gain the month before. The decline was the biggest monthly drop since January 1994.
The media sector was under pressure on several fronts. Lehman Brothers cut its price target on UK music company EMI to 177 pence due to expectations of falling revenues. EMI shares fell 7.5 per cent to 159.77 pence.
Advertisers retreated after US giant Interpublic scaled back its earnings target overnight, reminding investors that an advertising slowdown was unlikely to abate anytime soon.
Shares in Britain's Aegis were down 3.2 per cent and WPP dropped 2.6 per cent. Among French stocks, Publicis was down 3.4 per cent and Havas had lost 3.8 per cent.
Insurers were hit as investors feared the sector would be saddled with huge claims following the oil spill from a stricken tanker off the Spanish coast. Some analysts played down the magnitude of likely claims.
Compounding the sector's woes, credit rating agency Moody's Investors Service cut its outlook on Germany's Allianz to "negative" from "stable", reflecting a weakened earnings and capital position.