The telecom equipment makers were pushed lower by Motorola's warning that the first quarter of next year could see bigger losses than forecast. One of the poorest performers was its Swedish rival Ericsson, which lost 4.3 per cent to 55.50 Swedish kroner, its lowest level for a month. Nokia was off 2.8 per cent at €27.40.

Alcatel followed Motorola's example by announcing 1,700 job cuts at its French unit, CIT. Alcatel said they were part of the 10,000 job cuts announced in October.

Swiss digital technology group Kudelski took a dive as it said it would issue $285 million worth of convertible bonds. The shares closed 6.5 per cent lower at 98.90 Swiss francs. But SAP's bankers denied the software group had any plans for a convertible bond issue. SAP lost 1.8 per cent to €147.01.

The downbeat mood extended to telecom shares, which were down 1-2 per cent. France Telecom lost 1 per cent to €44.39 and Deutsche Telekom fell 1.2 per cent to €19.15. Deutsche Telekom said it was revaluing its property holdings for the second time this year, which will cut another $416 million off its assets.

In engineering, the Swiss group ABB fell sharply on lingering fears about its exposure to asbestos-related claims and a warning by its US rival General Electric that power systems orders might fall next year. ABB shares closed 4.7 per cent lower at SFr15.35, taking it back down to its level of early November.

For the French engineering group Alstom, Morgan Stanley cut its earnings per share forecasts for next year, but raised them for 2003 and 2004. The shares were very heavily punished in September after it emerged that Alstom had a big exposure to the failed US cruise company Renaissance.

French insurer AXA remained in focus after Tuesday's 6.3 per cent tumble to a two-month low in the wake of its profits warning. Schroder Salomon Smith Barney raised its price target on AXA to €28 from €24 and said the stock had overreacted to Tuesday's news.