Europe's technology shares hit fresh two-year lows in opening trade today as more US profit warnings unnerved investors, but British insurer Prudential rose on signs its US takeover bid may fail.
The global sell-off was partly triggered by a slew of US profit warnings and job cuts, especially in the technology sector. The Dow Jones industrial average shed three per cent to end at 9,485.71 points, and is close to joining the Nasdaq Composite and S&P500 index in bear territory.
"What you are seeing now is savage slashing of profit forecasts, and I think it's quite healthy as these companies should have been downgraded all along," said Mr Robert Kerr, European strategist at Bank of America.
"The sell-off we saw on Wall Street yesterday is part of the process of moving from complacency to fear, and there is real fear now," Mr Kerr said today.
"The bottom in the market will be reached once the speed at which earnings of companies like Nokia and Alcatel are being downgraded begins to slow," Mr Kerr added.
The FTSE Eurotop 300 index of European blue chips fell 1.7 per cent to 1,311 points, while the narrower DJ Euro Stoxx 50 index shed two per cent.
Tech leader Nokia was the top blue chip decliner, down 4.5 per cent. The DJ Stoxx European technology sector index shed three percent to hit lows last seen in April 1999.
European stock indices had already slumped three percent yesterday in a broad-based sell-off led by the telecom equipment suppliers.