European shares reeled to fresh six-year lows yesterday afternoon, hammered by slides in UK insurer Prudential and German drug firm Bayer, and news of a slump in the US Consumer Confidence index.

At 1513 GMT, the FTSE Eurotop 300 index was down three per cent at 753 points, well below the six-year close of February 13 at 769.54 points.

On Wall Street, the Dow Jones industrial average sank 1.68 per cent to 7,726 points, extending its losses after the Conference Board reported that its index of US consumer confidence for February slumped 15 points to 64, against expectations for a fall to about 77.

"The US economy is struggling against two headwinds in the shape of higher geopolitical risk because of the Iraq situation and higher energy costs because of high oil prices, and that's flittering down and hurting consumer sentiment," said Kevin Grice, senior economist at American Express Bank.

"The data suggests the pick-up we saw in consumer spending in December and January will ease off in February/March."

Shares in Prudential dropped 20 per cent on fear it will stop raising its dividend, while Bayer shed 15 per cent on mounting worries about its exposure to lawsuits rela-ted to its withdrawn anti- cholesterol drug Baycol.