With another big-name earnings disappointment from the US and the Nasdaq falling below 3,000, technology shares had a hard time in Europe. The IT sector was the worst performer on the FTSE Eurotop after computer maker Hewlett-Packard reported fourth-quarter results short of Wall Street expectations.

Alcatel, Nokia, Ericsson and Marconi were all hit. French telecom equipment maker Alcatel ended 6.4 per cent down at €63.50, Nokia fell 6 per cent at 42.47 and Ericsson was off 2 per cent at SKr114. Marconi fell more than 8 per cent.

Europe's leading software maker SAP fell 6 per cent to €198.60. Smaller names in Germany were equally hard hit, with the technologyladen Neuer Markt falling 10 per cent to a new year low.

STMicroelectronics fell 2.2 per cent to €48.40.

Media shares were also in the doldrums. France's premier broadcaster TF1 fell 4.5 per cent to €53.25 and its cable company Canal Plus fell 3 per cent to €166.50.

Internet companies had a bad day. Spain's Terra Networks fell 14.7 per cent to €22.30, a new low for the year, in spite of its weighting in the Ibex blue chip index being almost doubled.

The one bright spot from a company point of view was the postponement of the UMTS auction in Switzerland, which may have contributed to telecommunications companies getting off more lightly. France Telecom fell 3 per cent, Deutsche Telecom was down 2.7 per cent and Telefonica of Spain 1.5 per cent. Telefonica, which is due to publish third quarter results tomorrow, announced yesterday it would seek compensation from the government if plans to offer new wireless phone licences ate into Telefonica's spectrum space. Mr Howdle pointed out that of all the European mobile phone auctions only the UK and German ones had produced excessively large revenues for their governments. "If I were looking for one sector to recommend, it would be telecoms."

Even the "old-economy" sector of papermaking was not immune to the poor investor sentiment, following the uncertainty over the US election. Mediobanca, the Italian investment bank, tumbled 6 per cent to €13.40, giving back more than half of last week's speculative gains that took the share to a year's high on Friday. Insurer, Generali lost 4.7 per cent to €39.15, also in a retreat from its best levels of the year at the end of last week. The downturn came after the Italian investment bank unveiled an option to buy the Mediobanca and Generali stakes held by Lazard.