European benchmark indices dropped by 6 per cent to three-year lows today as investors ditched technology and insurance stocks amid growing fear of US military action.
By 11.40 GMT the FTSE Eurotop was down 5.8 per cent and the DJ Euro Stoxx 50 was down 6.4 per cent, slightly off session lows which took both indices to their lowest mark since October 1998.
Nasdaq 100 and S&P 500 index futures pointed to a weaker opening on Wall Street, and some traders predicted the Dow Jones industrial average would drop by around 200 points.
All but four of the Eurotop 300 index constituents were trading lower, with 2.3 billion shares changing hands by midday. All of the Stoxx 50 members fell.
ST Microelectronics dropped 11 per cent, Nokia 8.4 per cent and Ericsson 5.4 per cent.
Insurers were also hit hard, with French down 9.5 per cent and reinsurance companies Swiss and Munich Reboth dropped more than 4 percent.
Goldman Sachs cut its earnings estimates for the sector for the second day running after Munich Re doubled its loss estimates and Swiss Re sharply raised its estimated losses.
The investment bank also cut its earnings per share forecasts for the Eurotop 300 for 2001 and 2002 and said market jitters meant its estimates were still highly uncertain.
Financial and energy stocks also gave up more than 6 per cent each as every sector index slipped into negative territory.
Airlines were also bearing a heavy brunt with British Airways falling 12 per cent. The industry has been badly damaged by the attacks, which left more than 6,000 people dead or missing and wiped some 15 per cent off European equities.