Uncertainty about US interest rates and a broker downgrade for Sun Microsystems sent Europe's tech and telecoms shares to new lows.
Telecoms were particularly weak, with France Telecom hitting an 18-month low and Deutsche Telekom a two-year low. The worst performer in terms of percentages was Sonera, down 11.2 per cent to €12.80, also a two-year low.
France Telecom said it was discussing the sale of German mobile service provider Hutchison Telecom, which it cannot keep as a stand alone company for competition reasons. France Telecom's shares fell 3.3 per cent to €66.55.
ABN Amro downgraded a number of key European names including Deutsche Telekom, Equant, KPNQwest and Versatel. All the shares fell, with Versatel losing 6.5 per cent to €12.20 and Deutsche Telekom off 3.4 per cent at €25.85, although well above its low of the day.
Weakness at Deutsche Telekom was caused by its restatement of last year's results. Deutsche Telekom said it would sell its 10 per cent stake in Sprint, the US phone group. France Telecom said it would also sell its 10 per cent stake. Sprint was down 6 per cent at midday in New York. Telefonica, which has results out next Tuesday, fell 2 per cent to €17.86.
Deutsche Bank maintained its "strong buy" rating on the shares, saying they were trading at about 8.3 times EBITDA (earnings before interest, tax, depreciation and amortisation) compared with a sector median of 9.3 times.
Semiconductor companies were hit by evidence of a further slowdown in the US. The trade group Semiconductor Equipment and Materials International reported the level of orders compared with the value of products shipped had fallen sharply last month from $99 to $81. Infineon fell 2.6 per cent to €39.70, STMicroelectronics fell 3.8 per cent to €39.46 and ASM Lithography lost 5.1 per cent to €25.30.
Mobile phone leader Nokia was off 4.4 per cent at €27.45, a 15month low, while Ericsson slipped 2.3 per cent to 84.50 Swedish krone and Alcatel lost 4.2 per cent to 46.50.
The Neuer Markt fell to a two-year low of 2,107 on the Nemax 50 before rebounding to reach 2,170 in late trading, a fall of 1.7 per cent.
One of the Neuer Markt's leading stocks, the German online broker Consor, fell 4.3 per cent to an all-time low of €31.90, 10 per cent below its issue price as investors fretted about its earnings potential in tough trading conditions.
