European blue chips were at day lows yesterday afternoon after British bank Barclays published a downbeat forecast for the year and global handset leader Nokia disappointed with a weak outlook for its networks business.
"Nokia's comments on the global mobile handset market were in line with our expectations but what hurts is the outlook for networks, which was well below our forecast and that is why they are dragging Ericsson down as well," said one trader.
Among standout movers, British software group Sage fell six per cent despite upbeat results, as brokers downgraded the stock on worries about valuation and growth prospects.
By 1435 GMT, the FTSE Eurotop 300 index was down 1.78 per cent at 922 points, while the DJ Euro Stoxx 50 index was 2.1 per cent lower at 2,606 points.
The FTSE Eurotop 300 benchmark was trading close to three-month highs on Monday on hopes of an end-of-year rally but then fell back after weaker-than-expected US manufacturing data from the Institute for Supply Management.
On Wall Street, the Dow Jones Industrial Average was 0.94 per cent weaker while the tech-heavy Nasdaq Composite was 1.24 per cent easier.
Nokia, the world's largest handset maker fell 6.6 per cent after issuing cautious forecasts for mobile networks markets next year.
"For 2003, Nokia anticipates that the total market in mobile infrastructure will be down approximately 10 per cent while Nokia's addressable market should fare slightly better with a decrease of roughly 5-10 per cent," it said.
The global mobile network leader Ericsson fell 6.9 per cent while Europe's biggest mobile chipmaker STMicroelectronics fell 4.4 per cent.
"Nokia expects the networks market to shrink by 10 per cent next year. The figure is at low-end of the estimate range - down 10 per cent to flat - given by Ericsson. To sum up, the guidance for networks was a bit disappointing, but as a whole the news was very unsurprising," said an analyst.
The DJ Stoxx European banking sector index slipped 2.5 per cent as Barclays sent a chill through its peer group and economic gloom set in after the weak ISM data on Monday.
The sector has risen about 20 per cent since mid-October. "The banking sector's prospects are inextricably linked to the outlook for the macro economy, so the sector is mainly weak today after the poor US data yesterday," said Pierandrea Perrone at Nextra Asset Management, who covers the global financial sector from Milan.
Britain's fourth-biggest bank Barclays said profits this year would be at the bottom of market forecasts in a tough trading environment that has brought a rise in bad loans.
Barclays shares fell 6.1 per cent and while the UK's third-biggest bank, Lloyds TSB, eased 3.2 per cent on nerves ahead of its trading statement scheduled for today.