European shares sagged yesterday, tugged lower by disappointing earnings from global technology bellwether Intel and US bank J.P. Morgan Chase & Co that halted Wall Street's four-day rally.
Europe's technology sector was the worst hit on the day, falling 4.8 per cent as Dutch chip equipment maker ASML sank 14.9 per cent after Intel warned that fourth-quarter revenues would be lower than expected.
"We're really at the mercy of the US company results at the moment and the blow today was J.P. Morgan, whose figures seemed to come in well below expectations," said Gareth Evans, European equities strategist at ING Barings.
The second-biggest US bank earlier posted a sharp drop in quarterly profit on loan losses and weak trading results and said it planned to cut more than 2,000 jobs.
News and information group Reuters was the worst performer in the FTSE Eurotop 300 index, tumbling 22.7 per cent to fresh 12-year lows on a disappointing outlook statement.
By 1540, with only Frankfurt still trading, the Eurotop index was down 1.5 per cent at 885 points. The pan-European blue-chip benchmark is still up about 12 per cent since its turnaround from five-and-a-half-year lows began last Thursday.
The DJ Euro Stoxx 50 index shed 1.5 per cent to 2,448 points. On Wall Street, the Dow Jones industrial average fell 1.9 per cent to 8,098 points as component Intel slumped 17 per cent. The Nasdaq Composite, of which Intel is also a key component, dropped 3.4 per cent to 1,239 points.
Evans said the poor results coming out of the United States served as a reminder that the outlook on the corporate and economic front remained far from optimistic and brought an end to the market's four-day rally.
"There is still an absence of trigger which is really going to lead to a sustainable rise in the market, and the uncertainties that have plagued it are still there," he said.
Intel posted a rise in third-quarter earnings after the bell on Tuesday, but warned that revenue in the fourth quarter would be lower than Wall Street had expected, sending its European sector peers sliding as the industry cut investment.
The tech pain was compounded just before Wall Street's open when US wireless technology giant Motorola cut its outlook for the fourth quarter and 2003, blaming slowing demand in broadband, infrastructure and semiconductors.
German chip maker Infineon sank 5.6 per cent after echoing Intel in saying it would cut spending because of weaker demand. Philips Electronics fell 9.8 per cent, weighed down after Commerzbank cut its price target on the stock.
Franco-Italian chip company STMicroelectronics lost 6.1 per cent. The group denied a report it is courting Motorola to create an industry number two after Intel, and Motorola declined to comment.
Nokia, the world's largest handset maker, fell 5.1 per cent amid jitters ahead of its third-quarter results on Thursday. The company is expected to report a 10 per cent year-on-year rise in pro-forma third-quarter pre-tax profits to 1.18 billion euros ($1.16 billion).
Shares in Europe's biggest mobile phone operator Vodafone Group fell 6.2 per cent after it announced a 13.07 billion euro ($12.84 billion) cash bid for control of French mobile operator Cegetel, including a cash offer to debt-laden Vivendi Universal for its stake.
Europe's leading mobile operator said it had agreed to pay 6.3 billion euros for 41 per cent of Cegetel held by British and US telecom groups BT and SBC. It also made a 6.77 billion euro offer for Vivendi's 44 per cent holding.
Vivendi shares were up one per cent on the prospect of fresh cash to cut its debt pile, while BT fell three per cent.