Shares in Baltimore Technologies dropped to a 27-month low yesterday as a gloomy statement from a US rival added to jitters over prospects for the Irish Internet security specialist.

Baltimore shares, which have underperformed the British software and technology sector by 64 per cent already this year, dropped as low as 65p sterling - their lowest since January 1999 - before closing down almost 18 per cent at 70p on a day when technology stocks took a hammering across Europe.

Analysts said Baltimore fell in response to a warning from Califoria-based Entrust Technologies - one of a few listed firms operating in the specialised Internet security sector - that first-quarter results would fall below expectations.

Entrust said it expected to post a first-quarter loss from operations in the range of 32-34 US cents per common share on revenues of $31-$32 million.

That was down from its previous forecast of a profit of one or two US cents and revenues of $50-$51 million.

"In Baltimore's sector, there are only two or three main companies that are listed, so the Entrust warning makes things a little bit difficult for Baltimore," said Mr Marco Pabst, analyst at UBS Warburg.

Baltimore was the second-biggest loser in the FTSE 250 index of midcap stocks, with other technology stocks falling sharply after a batch of US profit warnings. The FTSE Techmark 100 index of technology stocks was down 5 per cent.

Other major tech losers yesterday included UK-based software group Autonomy Corp which lost 17 per cent in the general slide to last trade at 618p sterling.

But analysts said the fall in tech markets might end as firms began to appear oversold. "Valuations for some of the tech and computing stocks have reached very attractive levels," said Mr Pabst.

Across Europe, tech stocks suffered with the Neuer Markt All Share index skidding below the 1,500 points mark for the first time. News that Nokia, Ericsson and Alcatel would finance the supply of next-generation telecom equipment for France Telecom's Orange mobile phone operator contributed to the uncertainty. The deal raised fears that equipment suppliers were overexposed to the huge debts racked up by telecom firms.

The telecoms supplier woes sent the DJ Stoxx European tech index down 7.5 per cent to its lowest level since mid-April 1999.