Europe slumps to 8-month lows

A sell-off of Europe shares kept traders busy on Wednesday

LONDON, England (CNN) -- European markets closed near eight-month lows on Wednesday, weighed down by tech and telecom stocks, as the fallout continued from Nokia's warning in the previous session.

Concerns over corporate profits and economic recovery drove the euro to 17-month highs against the dollar as investors pulled out of U.S. stocks. The euro was trading at 94.54 U.S. cents in late afternoon London trading on Wednesday. (Full story)

London's FTSE 100 fell 1.5 percent to 4,861.2 and the CAC 40 blue chip index in Paris dropped 2.6 percent to 4,004.76, while Frankfurt's electronically traded Xetra Dax was down 1.8 percent to 4,524.7 in late trading (the German market was set to close at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, lost 2.2 percent to 1,105.71, near the eight-month low it reached last week. The information technology, computer services, media and pharmaceutical sub-indices led the declines.

"There is a very low propensity to buy equities at the moment and in our view it will remain low for the time being. The market is being driven by psychological factors and not fundamentals," Hendrick Garz, European equity strategist at WestLB Panmure, told Reuters.

Nokia, the world's biggest mobile phone maker, fell 5.9 percent to 13.27 euros on Wednesday, almost wiping out its gain of 5.9 percent in the previous session. Investment banks Morgan Stanley and Schroder Salomon Smith Barney cut their target prices for Nokia and lowered earnings estimates.

On Tuesday, Nokia's share rose amid relief that its mid-quarter update was not as bad as feared. But Nokia did cut its sales target due to a weak handset market and a reluctance by telecom operators to spend money but stuck to its earnings forecast. (Full story)

Swedish rival Ericsson, Europe's third-largest mobile phone maker, which was among the few stocks affected by the Nokia warning on Tuesday, continued to get battered on Wednesday. Its shares dropped 8.7 percent to 16.80 crowns.

Alcatel (PCGE), France's biggest telecom equipment maker, fell 5.3 percent to 10.46 euros.

France Telecom (PFTE), the former state monopoly, lost 5.5 percent to 17.81 euros. On Tuesday, the company ended a cooperation pact with its German partner and mobile phone operator MobilCom. France Telecom, which owns 28.5 percent of MobilCom, hopes to conclude an agreement for MobilCom's creditor banks to buy MobilCom CEO's stake in the operator. (Full story)

Vodafone (VOD), Europe's biggest mobile phone operator, dipped 2.3 percent to 98.15 pence and Deutsche Telecom (FDTE), Europe's biggest phone company by sales, was down 2.8 percent to 10.35 euros in late Frankfurt trading.

ARM Holdings (ARM), Europe's biggest chip designer, dropped 8.1 percent to 169 pence. The company is expected to be dropped from the FTSE 100 index of leading London shares in its quarterly reshuffle.

French chipmaker STMicroelectronics (PSTM) lost 4.3 percent to 24.12 euros, while German rival Infineon (FIFX) was down 4.8 percent to 15.85 euros in late Frankfurt trading.

In the media sector, the UK's Pearson (PSON) lost 3.9 percent to 793 pence after it said the prospects for a recovery in earnings this year remained good but its stock fell amid signs its Financial Times newspaper arm was continuing to suffer from the advertising downturn. (Full story)

TF1, France's top commercial broadcaster, took another hit after France was eliminated from on Tuesday from the World Cup. TF1, which bought exclusive French rights to broadcast the World Cup for 60 million euros, was hoping to recoup its costs through advertising revenue. (Full story) Its shares fell 4.5 percent to 30 euros in Paris.

Credit Suisse, Switzerland's second-largest banking group, lost 3.5 percent to 52.40 euros after it announced it would cut 500 more jobs in its financial services arm, aiming to reduce costs in bread-and-butter retail banking while maintaining full-service treatment for wealthy clients. (Full story)

In the pharmaceutical sector, GlaxoSmithKline (GSK), Europe's biggest drugs company, fell 0.7 percent to 1,348 pence after several U.S. companies delivered bad news to investors.

Drug company Merck said on Tuesday it would delay the new drug application for its painkiller Arcoxia after a request for more test data from regulators. And Abbott Laboratories (ABT) cut its second-quarter and 2002 earnings outlook, due mainly to manufacturing problems at an Illinois plant and slower sales of an anti-obesity drug, Meridia/Reductil.

Rival AstraZeneca (AZN) fell 3.3 percent to 2,800 pence in London and France's Aventis (PAVE) slipped 1.9 percent to 68.70 euros in Paris.

In Amsterdam the AEX index lost 3.3 percent and Milan's MIB30 index fell 1.9 percent, while the SMI in Zurich was down 3 percent.

In the U.S. on Wednesday, stocks straddled the break-even point as investors took in an improved forecast from Procter & Gamble amid continued tech weakness stemming from Siebel Systems, Juniper Networks and ImClone Systems.

In mid-morning trading, the Dow Jones industrial average was down 2.56 points, or 0.03 percent, to 9,514.7, while the tech-laden Nasdaq composite index was down 3.13 points, or 0.2 percent, to 1,494.05.