Technology shares have been in the spotlight again for all the wrong reasons. Bellwether stock Cisco reported disappointing results for its fourth quarter. Worse still, chief executive John Chambers warned of further deterioration in European markets.

Merrill Lynch quickly cut its earnings and revenue forecast for the networking giant and the fall-out from Cisco's outlook hit the value of rivals in the European market.

Credit Suisse First Boston had earlier downgraded a range of companies manufacturing computer chips and the equipment required to produce them in a signal that it is pessimistic about the short-term prospects for the hardware sector.

Credit Suisse, for the first time, forecast a decline in PC shipments in 2001 and sharply cut its 2002 growth forecast for the sector.