The outlook for telecoms is not much better, with Merrill Lynch dowgrading six European telecoms stocks - including heavyweights Deutsche Telekom and France Telecom, which went to "reduce" from "accumulate".

Merrill argues there is little margin for error in the performance of the companies going forward and believes both have a downside of between 20 and 25 per cent - news that will not be welcome to the substantial number of Irish investors in Deutsche.

Norway's Telenor also slipped to "neutral" from "accumulate" while Danish telecommunications group TDC, Swisscom and Dutch-US joint venture company KPNQwest were cut to "reduce" from "neutral".

Merrill maintained its "buy" recommendation on Vodafone, which owns Eircell, calling it the pick of the European telecoms sector.