European shares fell for the third consecutive session yesterday with tech titan Nokia and insurer Axa bringing war-focused investors' attention back to a bleak corporate picture.
Hefty losses in heavily weighed oil shares contributed to the markets' march down - after news Kurdish fighters had taken control of the oil city of Kirkuk pushed crude oil prices lower - as did Wall Street's early session losses.
News of the killing of a senior Iraqi Shi'ite leader, an aide of the leader who last week called on the population not to hinder the US and British invasion, reminded investors that tensions in Iraq were far from over.
"People start to think that the fall of Baghdad doesn't mean the end of the US involvement in Iraq, that the country is not going to be easy to manage and that the whole Iraq issue is not going to disappear from our screens overnight," said a senior trader.
Rekindled corporate worries as quarterly earnings reports gather pace and the global economy gave no signs of strengthening continued to dampen market sentiment.
"The markets are braced for poor first-quarter earnings but companies could go some way to shake them out of their gloom by providing investors with some form of guidance, which they have refused to do in the past months," said strategist Jean-Noel Vieille of Paris broker Aurel Leven.
By 1600 GMT, with only Frankfurt still trading officially, the FTSE Eurotop 300 index of pan-European blue chips was down 1.88 per cent at 793.40 points while the narrower DJ Euro Stoxx 50 index shed 2.5 per cent.
Among national benchmarks, London's FTSE 100 closed 1.5 per cent lower while the CAC-40 sagged 2.75 per cent in Paris and the Swiss Market index was 2.2 per cent weaker.
French insurer Axa was pummelled 6.4 per cent lower after it said its estimated 2002 loss under US accounting rules could be nearly double its original forecast at 2.9 billion euros ($3.1 billion), due to more stringent investment writedowns.
Finland's Nokia fell six per cent after announcing it would slash 10 per cent of staff at its struggling Networks unit as it battles to match costs with flagging demand.
Elsewhere, UK aeroengine maker Rolls-Royce closed 3.3 per cent lower after saying that the flu-like virus SARS had hit some of its major customers but that it was still too early to estimate the cost the outbreak would have on its business.
Shares in France Telecom fell over five per cent to 19.61 euros after it placed 69.6 million shares left over from last month's 15-billion euro capital increase.
Shares in Roche Holding fell 4.7 per cent after the Swiss drugs group reported a three per cent rise in first-quarter core sales, disappointing analysts who had expected better.