While European tech stocks were battered by further bad news from the US, the banking sector suffered some equally stunning falls. Another outing for rumours of big losses on junk-bond dealing sent European investment banks sharply lower.
Retail banks, meanwhile, usually a convenient destination for investors switching out of the investment banking sector, also faced problems. These stemmed from heightened competitive tensions after news from Halifax, the UK's biggest mortgage bank, of a £100 million plan to double its market share in Britain.
Big losers were to be found in all the major markets, although many analysts cautioned that the falls looked overdone and stemmed from some substantial overnight losses in the US.
Analysts noted that only two of Europe's big losers Deutsche Bank which tumbled 7.8 per cent to €84.90 and CS Group dropped 8.9 per cent to €298 were among the top 10 underwriters of high yield paper.
While Deutsche, Europe's biggest bank, denied that the bank had suffered losses from junk bond dealing, it unsettled some investors when it declined to offer more details. Dresdner Bank also felt the backlash about worries in the sector, losing 6 per cent to €45.32.
Elsewhere, BNP Paribas dropped 6.9 per cent to €89, while ABN Amro and UBS each shed 6.5 per cent to 24.32 and SFr213.50 respectively.
It was another day of sell-offs in technology, media and telecoms, as the bad news from the US continued. Markets had three corporate stories to digest: profit warnings from telecom equipment makers Lucent and Motorola plus disappointing results from Yahoo!. Many European stocks showed share price falls of 5 to 10 per cent in heavy volumes of trade. Turnover in Paris was twice that of an average day.
The picture was almost as bleak in telecoms operators. Deutsche Telekom fell only 1.6 per cent to €36.57 but France Telecom lost 6.7 per cent to €96.20 and Bouygues more than 9 per cent.
Internet companies got off relatively lightly from the Yahoo! effect, partly because they had already taken a battering the day before. Selected oil stocks continued to push higher as investors tracked another upbeat day for crude oil prices, with Brent Blend for October pushing above $32 a barrel. Royal Dutch gained 1.46 at €73.52 and Eni jumped to €6.71. Late profit-taking left Eni ended just 2 cents ahead at 6.56.
