German equities fell to their lowest level for almost two months after Frankfurt tumbled 36.63 to 4,814.04 on the Xetra Dax index for a two-day decline of 5.5 per cent.

The Dax is now 22 per cent short of last July's peaks. Part of the blame lay yesterday with a 4 per cent decline at Metro, which ran into a swathe of broker downgrades after a disappointing trading statement.

The top retailer turned in a 4.8 per cent gain in adjusted sales for 1998, but the final-quarter figures fell short of the broad numbers that most analysts had pencilled in. The shares fell to a session low of €61.80 before closing at €63.90, down €2.80.

The sector streamed lower in sympathy. Karstadt ended €18 lower at €332.

Deutsche Telekom, the market heavyweight, came off €1.66 at 334.44 and there was further weakness in financials where Munich Re lost €5.60 at 3196, a setback of 10 per cent in two days.

Amsterdam ended 5.57 lower at 512.49 on the AEX index with a steep fall for Philips and more weakness among financials offsetting a rally at Unilever.

Philips was swept lower by the overnight tech shakeout on Wall Street, giving up €1.55 or 2.4 per cent at €62.90. Baan lost 35 cents at €8.05 and ASM Lithography shed €1.75 at 339.25.

Among financials, Aegon lost €2.55 at €89.10 and Fortis €1 at €33.10.

PARIS rebounded on the back of the strong start on Wall Street, with the CAC 40 closing 36.56 lower to 4,001.93 after spending most of the day below the 4,000 mark.

Eridania Beghin-Say lost €6.50 or 4.8 per cent to €128.10 on disappointing 1998 sales figures, whereas Promodes gained €7 to €595 after posting 1998 sales up 16.3 per cent.

Zurich lost ground, but closed above the day's lows after a session in which many investors chose to book profits. The SMI index closed 51.8 lower at 6,891.2.

Milan reversed early falls to close higher as a burst of short-covering was triggered by the futures market. The real-time Mibtel index closed with a gain of 247 at 22,645.

Madrid returned from negative territory to end 1.4 per cent higher after the robust opening on Wall Street dispelled fears of a run on high-tech shares. The general index closed 11.72 higher to 857.93 after hitting a 837.69 low. Blue chips posted solid gains, with Telefonica rising €1.45 to €39.70 and Endesa adding 87 cents at €22.99.