European share prices recoiled again in early trading today as US losses, grim economic data and a downbeat outlook from British-based banking giant HSBC dampened investors' spirits.
Across the 12-nation euro zone, the Euro Stoxx 50 index lost 3.0 per cent to 2,471.2 points.
The British FTSE 100 index dropped 2.7 per cent to 3,965.8 points, the German DAX 30 index slumped 3.7 per cent to 3,401.8 points and the French CAC 40 index gave up 2.6 per cent to 3,161.9 points.
The euro was trading at 0.9852 dollars.
"There has been some follow-through from weakness in Wall Street undoubtedly on Friday," said Mr Jeremy Batstone, head of research at NatWest Stockbrokers.
In New York, markets extended losses after the closing bell in Europe on Friday. The Dow Jones blue-chip index ended the day down 2.3 per cent and the tech-rich Nasdaq shed 2.5 per cent.
"The week has also got off to a bad start both in terms of the corporate and economic data," Mr Batstone saud.
On the corporate news front, British-based banking giant HSBC was in the spotlight.
HSBC said first-half net profit fell seven per cent to 3.28 billion US dollars as bad debt charges climbed sharply amid "difficult market conditions".
The result was at the upper end of analysts' expectations, which ranged between 2.9 and 3.3 billion US dollars.
But Chairman Mr John Bond said the bank remained cautious and was continuing to position itself for "a subdued environment" over the rest of the year.
"Consumers who drove a prolonged period of growth and mitigated the effects of the bursting of the technology and telecoms bubble, are becoming more cautious," he said.
"Without growth in corporate profitability and investment, a stock market rebound is unlikely."
Shares in the bank slipped 0.7 per cent to 699 pence, outperforming the wider market.
Other financial and insurance stocks were also on sale.
Dutch insurer Aegon tumbled 6.4 per cent to 11.77 euros, German peer Allianz fell 5.5 per cent to 126.18 euros, while French Axa lost 4.3 per cent to 10.88 euros.
There was also grim economic data from Britain, where figures showed that industrial and manufactured output both suffered the biggest monthly fall for over 20 years in June, with industrial output down 4.3 per cent from May and manufactured off 5.3 per cent.
But the National Statistics office said the sharp declines were partly owing to two extra bank holidays in June for Queen Elizabeth's golden jubilee.
With US economic data showing renewed signs of weakness in the world's largest economy, investors are keeping a close eye on the indicators to see whether the global economy could be heading for a "double dip" slowdown.
"Basically, we're not going to see any V-shaped recovery," said one Paris trader. "And now there's talk of another interest rate cut in the US, and if this happens, they'd be saying the economic conditions are worse than people thought."
Elsewhere in Europe, the SMI index of leading Swiss shares fell 4.0 per cent to 4,835.0 points, the Amsterdam AEX index shed 3.6 per cent to 324.1 points, the Brussels Bel-20 dropped 2.8 per cent to 2,058.5 points, the Madrid Ibex-35 dipped 1.6 per cent to 6,015.0 and the Milan Mib 30 eased back 2.3 per cent to 23,792.
In Asia, Tokyo share prices closed flat on Monday while Hong Kong shares dropped 1.3 per cent.
The Dublin market is closed for the bank holiday.
AFP