European blue-chips sank this morning, following losses on Wall Street and as regulators stirred up worries over corporate accounting by launching a probe into media giant Vivendi's accounts.
"Valuations have improved and US earnings estimates for the second quarter are not too demanding," said Evans.
"Economic data still suggests there will be a reasonable pick-up in activity."
In the technology sector, Finland's Nokia fell 2.8 per cent, France's Alcatel dropped six percent and Germany's Siemens lost three per cent, mirroring the Nasdaq's losses.
In the chip sector Germany's Infineon Technologies lost 1.5 per cent and Franco-Italian STMicroelectronics was five per cent weaker.
Insurers and financials fell heavily on concerns over their exposure to falling equity markets.
Europe's largest insurer Allianz dropped 4.5 per cent, Switzerland's Zurich Financial fell 5.9 per cent and Swiss financial giant Credit Suisse dropped 5.2 per cent.
"Insurers and life assurers are looking oversold at the moment but with sentiment so negative toward these stocks it is difficult to predict a rebound," said Evans.
The world's largest reinsurer Munich Re was 4.12 per cent lower after it said its provisions for the World Trade Center disaster had risen by $500 million even though the group also said it expects a very positive first half result due to capital gains.
Shares in Franco-American Vivendi were 6.6 per cent lower after French regulators launched a probe into its accounts, turning up the heat on the world's second biggest media group as it scrambles to pull together a rescue deal to stave off default.
A spokeswoman for the COB said that the watchdog was not conducting a formal audit of the firm's accounts, but rather verifying that the information given by the company to the public since January 2001 had been consistent with what it knew about its own financial situation.
"It was pretty inevitable that the regulators would get involved at Vivendi after recent events, what they will find is anybody's guess," said Nigel Cobby, managing director of European equities at Deutsche Bank.
Germany's Deutsche Telekom climbed 0.88 per cent after the Wall Street Journal reported the German operator's unit VoiceStream is holding preliminary merger talks with AT&T Wireless in a deal that could be worth over $10 billion.
Mounting hopes that embattled Chief Executive Ron Sommer will step down also supported the stock.