Tech stocks suffer as negative sentiment holds

Nokia's profits warning earlier in the week continued to haunt technology stocks, which were struggling against another negative start for the Nasdaq after four days of falls. Nokia fell 7.8 per cent to €25.90, shedding all and more of Wednesday's technical bounce, while Ericsson fell 4.5 per cent to 53 Swedish krona (€5.74).

Chip makers also continued to suffer. STMicroelectronics said its second-quarter turnover and operating margin would be "further penalised by well-known weaknesses in some of its final markets". Shares in the company, which derives about 13 per cent of its sales from Nokia, fell 4.2 per cent to €38.52. The Dutch maker of chip equipment ASM Lithography fell 7.7 per cent to €26.88.

Europe's biggest software group SAP fell 6 per cent to €161.25 in spite of Hasso Plattner, the chief executive, giving reassurance that he was "very comfortable" with SAP's 23 per cent sales growth target for the first nine months.

The worst-hit blue chip was pan-European cable company UPC, which fell more than 13 per cent to €4.17, a new low.

In telecommunications, Finland's Sonera was down 6 per cent but Sweden's Telia was up 2.9 per cent, the opposite of what might have been expected if a takeover by Telia was approaching.

TeleDanmark, another possible part of any takeover scenario, fell 3 per cent to 337 Danish krone (€45.21).

Italian telecom stocks were lower as Telecom Italia executives again denied they had received notice of a judicial investigation into merger deals. Telecom Italia fell 2.5 per cent to €10.77, its owner Olivetti fell 5.25 per cent to €2 and Telecom Italia Mobile slipped 4.3 per cent to €6.11.

Swissair had another angst-ridden day, sliding steeply amid rumours of more negative broker comment and reports that the airline was to pump more funds into the half-owned Sabena.

Last week ABN Amro revised its sum-of-the-parts valuation for Swissair down to 71 Swiss francs (€46.54). However, Deutsche Bank stood by its SFr120 valuation. Swissair ended 8 per cent lower at SFr104 (€68.17).