European blue-chips remained firm yesterday afternoon as Wall Street gave back some of yesterday's hefty gains after a profit warning from Dow Chemical and broker downgrades of firms like Cisco Systems Inc.
Dow, the US's second biggest chemical company, became the latest big name to cut its outlook by warning that third-quarter earnings would be lower-than-expected, highlighting that the operating environment on both sides of the Atlantic remains difficult.
"I can't really see why the long-term downtrend should have changed - there's still too many worries over the earnings outlook, the economy, Iraq, and so forth," said David Thwaites, pan-European equities strategist at BNP Paribas.
The DJ Stoxx European chemical index reversed a 3.9 per cent rise to stand down 0.5 per cent after the Dow warning, with Britain's ICI off 4.1 per cent, France's Rhodia down 0.3 per cent and Germany's BASF 3.9 per cent lower.
US stocks were also undermined by a batch of broker downgrades on US companies like network equipment maker Cisco Systems Inc and chip equipment makers Applied Materials and Lam Research.
The downgrades offset news overnight from Dell, the world's second biggest personal computer maker, that it had upgraded its third quarter sales forecast.
By 1340 GMT, the FTSE Eurotop 300 index was up 1.2 per cent at 841 points, paring much of its 3.4 per cent gain earlier in the day, while the narrower DJ Euro Stoxx 50 index gained 1.5 per cent to 2,300 points.
The Dow Jones industrial average was down 0.9 per cent, while the Nasdaq Composite was off 0.4 per cent.
Elsewhere, shares in Europe's biggest company BP fell 1.6 per cent, bucking the upward trend in the heavily weighted energy sector kick-started by crude oil prices edging towards $30 a barrel.
BP confirmed that September's tropical storm Isidore blew a hole in BP's already faltering oil and gas output growth in the third quarter.
Among the gainers, French spirits group Pernod Ricard jumped 7.1 per cent after reporting better-than-expected first half net profits and reaffirming its 2002 forecasts.
German skin care and cosmetics firm Beiersdorf added 5.7 per cent after reports that US consumer products giant Procter & Gamble had made a firm offer to buy the 43.5 per cent stake owned by German insurer Allianz AG.
Allianz was down 3.3 per cent.