Stock markets tumbled across Europe yesterday, depressed by steeply climbing bond yields, the weakening dollar and an early fall on Wall Street.
The mid-morning rally in the Dow Jones Industrial Average came too late to prevent falls of more than 2 per cent in the three main pan-European indices.
The Eurobloc 100 index of leading shares in the euro zone dropped 22.90 or 2.2 per cent to 1,013.16, while the Eurotop 100 index fell 62.17 or 2.1 per cent to 2,830.36. The more broadly based Eurotop 300 index ended 27.90 or 2.2 per cent lower at 1,236.55.
The underperformance of Europe relative to the US stemmed partly from the contrasting fortunes of bonds in the two regions.
Shortly after the close in Frankfurt, the yield on the benchmark German 10-year bund had advanced to 4.98 per cent, up from 4.89 per cent, despite a decline in the yield on the US Treasury 10-year from 5.95 per cent to 5.91 per cent.
Frankfurt stumbled 2.8 per cent lower as weakness on Wall Street compounded the market's disappointment with the day's results from Mannesmann and BASF. The Xetra Dax index finished 140.92 lower at 4,978.45.
Paris suffered heavy selling of technology and telecommunications stocks, with investors worried about the sectors' high valuations.
The CAC-40 finished 85.50 or 2 per cent down at 4,240.70.
The dive by telecoms reflected growing concerns that their high multiples might be difficult to justify, given the prospect of greater competition, more regulation and pressures on pricing power.
Zurich was hit by a wave of selling , especially in financials, and the SMI index finished 144.1 lower at 6,751.1.
Milan closed just above its lows for the day with the Mibtel index 434 or 1.9 per cent down at 22,435.
Against the trend, Banca Popolare di Brescia closed flat at €40.60, after an early 2.2 per cent rise on renewed buying after its recent underperformance.
