Mobile phone maker Nokia led a broad slump in European shares to eight-month lows yesterday after a revenue warning from chip leader Intel showed the failure of economic recovery to revive earnings.
"You have got to be fundamentally worried when the macro economy shows signs of recovery, yet markets are making new lows," said Robert Sellar, a technology specialist at Aberdeen Asset Management.
"We are due for a bounce as indicators show we are seriously oversold."
Shares in Nokia, the world's top mobile phone maker sank nearly eight per cent. The stock, once a feature of every portfolio, has halved this year and is now trading at December 1998 levels.
Nokia's slide was greased by a profit warning from wireless chip maker RF Micro Devices, which blamed delays in new handset launches.
Nokia, which is RF Micro Devices' biggest customer, is due to give is own mid-quarter trading update next Tuesday, an event the market hopes will help lift the gloom hanging over stocks.
At 1530 GMT with only Frankfurt still officially trading, the FTSE Eurotop 300 index was off 1.6 per cent at 1,113 points, and heading for its lowest close since October 2.
Selling was broad with declining issues outnumbering advancers by a hefty six-to-one margin.
Technology, telecoms, autos, media, and insurers were weakest, but some cash found its way into defensives such as tobacco, water and gas utilities, and real estate.
The pan-European Eurotop 300 blue chip index is down just over five per cent for the week, and 11.7 per cent for the year.
The narrower Euro Stoxx 50 index shed 2.4 per cent to 3,198 points.
On Wall Street, the Dow Jones industrial average was off 0.8 per cent at 9,542 points, while the tech-laden Nasdaq Composite was off two per cent. Intel is a key component of both indices.
Intel lowered its revenue guidance for the second quarter late on Thursday, sending Europe's technology sector plunging more than six per cent in early trade.
As bourses closed, the DJ Stoxx technology index was down 4.7 per cent, off the day's lows that were under the trough hit after the September 11 attacks.
Chip-related shares were hit hardest, with Franco-Italian STMicroelectronics down 5.6 per cent, Germany's Infineon off 4.6 per cent and Dutch Philips Electronics shedding 6.5 per cent.
Few buyers were looking to step in amid the silicon rubble. "We're going to have to wait longer for a recovery in chip companies' earnings, even in the personal computer segment, so the share price falls look justified," said Pia Hellbach, global fund manager at Union Investment, the third largest mutual fund in Germany with 100 billion euros under management across all asset classes.