Telecommunications stocks were under pressure in spite of the stabilising Nasdaq.

The Dutch operator KPN fell for a fourth successive session to another five-year low in heavy trade as the shares were pounded from several directions. One was the US, where telecom BellSouth, which has a 22.5 per cent stake in the KPN-controlled German mobile company E-Plus, can from tomorrow convert the stake into 200 million KPN shares, which it could then sell, pushing the price down further.

KPN is also pondering a big rights issue in its search for ways to pay off its €23 billion debts. KPN yesterday dismissed a Dutch newspaper report that it was considering selling its KPN Mobile arm. KPN shares closed down 5 per cent at €7.38.

Talk of consolidation among Nordic telecoms re-emerged. A Norwegian paper said the chief executive of Norway's telecoms leader Telenor had at the top of his list of possible takeover targets its Swedish rivals Tele2 and Europolitan. Telenor later played down the speculation. Its shares fell 2.7 per cent to 38.90 Norwegian kroner (€4.89), while Tele2 rose 1 per cent to 390.50 Swedish kroner (€41.87), and Europolitan was unchanged at SKr73.

The consolidation talk hit Finland's Sonera too, with the shares down 1.2 per cent to €9.63 as investors speculated about intensifying merger talks with Telia, Sweden's leading telecoms operator. Telia fell 3.5 per cent to SKr54.50.

France Telecom fell 2.6 per cent to €61.20. Analysts at Goldman Sachs expressed reservations about its share price: "There is some risk in the valuation of the core fixed business, which would need to sustain existing market share to support the share price."

Deutsche Telekom rose against the sector trend, gaining 0.8 per cent to €23.52 as it announced it will issue a $5 billion-€10 billion bond to roll over debt. The bond will not increase total indebtedness.

In technology, the telecom equipment makers fell back. Ericsson lost 3 per cent to SKr65 and Alcatel 4.1 per cent to €29.20, while Nokia was off 0.8 per cent at €35.85. Gemplus, the world's leading maker of smart cards, fell 7.6 per cent to €3.53.