The telecommunications meltdown continued, with the sector losing a further 3 per cent and beleaguered Deutsche Telekom down as much as 5.4 per cent to €18.09, another 3 1/2-year low.

VoiceStream's widening losses in the second quarter have piled further pressure on the shares, which were hit last week when Deutsche Bank placed 44 million shares in the market.

Finland's Sonera fell 6 per cent to €6.05 and France Telecom fell 4.8 per cent to €42.85, also a 3 1/2-year low.

Swiss pharmaceutical group Novartis banished some of the recent gloom with strong results. First-half net profit was up 10 per cent and Novartis was bullish about the outlook for the year as a whole and beyond. Its shares rose 2.2 per cent to SFr58.70.

There has been speculation about a merger with its Swiss rival Roche, which this week reported first-half sales growth of less than half those of Novartis. JP Morgan retained its SFr72 target.

Bayer, Germany's biggest drugs group, continued to take a hammering in the wake of the withdrawal last week of its anti-cholesterol drug Baycol. The shares closed 6.6 per cent lower at €32.64.

Getronics, the Dutch-based computer services provider that ranks number five in the world, cheered investors by sticking to its full-year outlook as it announced first-half results. The shares jumped 8.5 per cent to €3.58, having been up 23 per cent at one point. Getronics said first-half operating profit fell about a quarter but forecast that for the full year it would be at least €210 million versus €248 million in 2000.

Cap Gemini, the IT consultancy, was down 3.3 per cent to €78.30, chipmaker Infineon down 4.4 per cent to €24.25 and mobile handset maker Nokia down 4.8 per cent to €19.95.

Utilities raced up the performance charts with Eon and RWE featuring among the best of the FTSE Eurotop 100 index. Eon rose 2.7 per cent to €61.70 after producing six-month results broadly in line with the market consensus. RWE gained 2.9 per cent at €48.85.