A stunning profits warning sent ABB, Europe's largest electrical engineering group, spiralling lower and spelled trouble for other old economy stalwarts.

ABB tumbled 18.4 per cent down to SFr19.25, its lowest close since October 1998, as the company slashed its medium-term earnings outlook and announced job cuts. Group chief executive Joergen Centerman said he did not see a market recovery in the next 12 months.

The shares have fallen more than 60 per cent from their February 2000 peak, as trading conditions have worsened.

Investors were also unsettled last autumn when Goran Lindahl stepped down as chief executive amid speculation denied by the company that he had fallen out with Percy Barnevik, ABB's non-executive chairman.

Yesterday's announcement prompted a number of downgrades from investment banks, including ABN Amro, which cut its rating and set a price target of SFr20. "ABB should be avoided for the next six months," it said.

French energy and transport group Alstom fell 3.4 per cent to #31.82 in the wake of ABB's troubles. The company said late in the day that the slowdown in the US would have no impact on its current financial year and it was maintaining 2003 profitability targets.

Electrical equipment maker Legrand tumbled 7.1 per cent to #202 ahead of first half sales figures tomorrow, while electrical group Schneider lost 2.2 per cent to #59.20.

Germany's Siemens gave up 6.8 per cent to a 19-month low of #56.75 ahead of its own earnings figures due today. The company is expected to be hit by falling demand for telecommunications equipment and to report an operating loss in its communications division.

Financial services group MLP endured another torrid session as short-term investors, buyers ahead of its inclusion in Germany's benchmark DAX index on Monday, dumped the stock.

MLP, which provides financial advice to affluent clients and sells other banks' financial products, fell 8.9 per cent to #89.44, taking its losses over two sessions to 15.6 per cent.