Alcatel had another disturbingly volatile session as investors and analysts digested the French telecommunications equipment company's forecast of a big second-quarter loss.
Relief that Alcatel had abandoned a mega-dollar US takeover proved short-lived and the shares rapidly unwound early gains in trading conditions that grew increasingly frantic. By the close in Paris, 35.5 million shares had changed hands, up from 25.4 million on Tuesday.
News that Alcatel was not to link with Lucent Technologies of the US sent the shares up to #32.50 at the opening but the relief rally quickly evaporated as widespread speculation about broker downgrades came to dominate trading.
The shares finished 5.2 per cent lower at #29.26, a low for the year. It was a day to remember and it helped darken the clouds gathering above the telecoms sector.
France Telecom fell a further 4.4 per cent to #65.80, Deutsche Telekom 4.2 per cent to #24.50 and Telefonica 2.6 per cent at #17.32. KPN, which publishes first-quarter figures tomorrow, gave up 7.7 per cent at #11.29.
Reports of a share deals inquiry by the Consob, the Milan bourse regulator, compounded the problem for Olivetti which tumbled 9 per cent to #2.15. Its Telecom Italia offshoot shed 4.4 per cent at #11.18.
Semiconductor heavyweight STMicroelectronics dropped 6.7 per cent to #42 on worries that it might issue a profits warning of its own, while Infineon lost 3.2 per cent to #39.70.
European software leader SAP dropped 3.4 per cent to #164.20 while France's Cap Gemini lost 4.8 per cent to #134.90.
Cap Gemini was also bruised by news that holding company CGIP was to offer shares in the computer consultant to its shareholders at #143 a share. CGIP, whose investment in Cap Gemini has lost 60 per cent of its value in the past year, dropped 1.9 per cent to #47.29.
