European stock markets remained near 16-month lows as a huge drop in Cable & Wireless shares offset a technology bounce led by mobile star Nokia. At the close the pan-European FTSE 300 was down 1 per cent at 1,380 points, after scraping a new low of 1,373 points, while the narrower bluechip European Dow Jones Stoxx 50 shed 0.8 per cent.

Cable & Wireless plummeted almost 20 per cent after it issued a profit warning, citing tumbling prices in the US and Japan - only minutes after assuring investors it did not have any bad news up its sleeve. The company employs 260 people in Ireland and announced last night it was making 22 Irish employees redundant. The cuts will be made in its network management centre, stores and in management.

The Irish network management centre will close as part of its plan to migrate its 47 network management centres worldwide to five major centres.

With the markets still nervous after Ericsson's shock profit warning on Monday, Motorola weighed in with its own latest caution and job cuts, while Germany's Siemens fell 2.5 per cent after cutting earnings forecasts for this year.

The FTSE-100 index fell to its lowest closing level for two years, with the collapse by Cable & Wireless and weaker oil stocks adding to the negative tone on the market. But even though the Nasdaq market was trading higher in its opening session, sentiment towards telecom and technology stocks in Europe remained weak. London's techMARK index fell another 2.2 per cent bringing it to its lowest level for 17 months.

The Irish stock market fell by just under 1 per cent, but is still one of the best performing markets in Europe this year. The ISEQ is down about 3 per cent on the beginning of the year compared to losses of more than 10 per cent for the benchmark Eurobloc 300 index.

The Irish market is benefiting from the low weighting of telecom and technology shares and the strong performance by larger industrial stocks such as Elan, Ryanair and Galen.