Although European stocks ended flat overall, the technology sector continued to be punished following Nokia's sharp downgrade of sales prospects on Thursday. Nokia shares lost another 4.7 per cent on top of the previous day's 12 per cent, falling to €19.53, their first time below 20 for six months.

Frankfurt DAX: 5,284.55 (+21.67); Paris CAC: 4,606.42 (+17.6)

Some of the banks had been hanging on to optimistic outlooks. UBS Warburg cut its target on Nokia from €31 to €24, although it kept the recommendation of "buy". Lehman Brothers, which also recommends "buy", cut its target from €27 to €24.

Merrill Lynch analyst Mr Adnaan Ahmad, who rates the stock "neutral", said: "We continue to believe that 2G investments are not coming through in Europe, China is weak and we anticipate that 3G will continue to suffer from investment delays until new services and application business models are proved on 2.5G."

He said he believed Nokia would continue to trade in a range of €16 to €20.

Although Nokia has sent Helsinki's benchmark Hex index tumbling this week, it remains well ahead of other European bourses thanks to the steep rally from September to December.

Rival Ericsson, which reports first quarter figures on Monday, also took a battering. It fell 6.5 per cent to SKr35.90, equalling a 3½-year low it hit on September 21st.

Among other high profile technology shares, Alcatel fell 1.9 per cent to €15.39 and Siemens fell 2.2 per cent to €67.50.

But Thomson Multimedia, the French consumer electronics group, rose 1.9 per cent to €33.37 after signing a partnership deal with Vivendi Universal.

The Dutch-based alternative telecommunications carrier KPNQwest fell 10.4 per cent to €2.42 after US parent company Qwest issued a profit warning on Thursday.

KPNQwest has been under pressure because investors fear it may restructure its debt and dilute share values.