The shock profits warning from Finnish mobile phone giant Nokia capped another dire day for the European telecommunications and technology sectors.
The announcement sent Helsinki into near-free-fall, with the benchmark Hex general index losing 16 per cent by the end of daytime trade, its biggest one-day loss. European markets were at near six-week lows as investors braced themselves for further disappointment on the quarterly earnings front.
The weak showing on Wall Street as yet more US high tech companies warned of bleak figures in the pipeline, added to the gloom.
In late afternoon trade, the FTSE Eurotop 300 index was registering a loss of 1.9 per cent at 1,411.34, a comfortable 10 per cent above this year's late March low, but still a sharp 17 per cent below last September's all-time high.
Helsinki's plunge took the market back to levels last seen in mid-April and left Finnish blue chips 54 per cent below last year's high set in early May. Shares in Nokia, which said slower growth prospects would affect its second quarter results, plunged 21 per cent.
Meanwhile, fund managers continue to be more upbeat towards the global economy, according to a monthly survey by Merrill Lynch. But for the second month running, there was an increase in the number of fund managers expecting core inflation to rise.
And investors' appetite for European equities appears to be picking up after a lean start to the year. An analysis by Schroder Salomon Smith Barney shows inflows to European equity mutual funds recovered in April to 6.4 billion after two months of net outflows in February and March.
