US data showing a reverse in worker productivity compounded further gloom on the corporate front on both sides of the Atlantic.

Worries about corporate profits, poor US economic data and the perceived failure of the United States to sway those UN Security Council members opposed to imminent war in Iraq dragged market sentiment down yesterday.

"All three factors gelled today and down we went," said Mr David Thwaites, pan-European equities strategist at BNP Paribas.

In Europe, the decision by the Bank of England monetary policy committee to cut rates to their lowest level in 48 years further worsened sentiment and shares fell towards six-year lows.

The Dow Jones Industrial Average spent the day in negative territory, closing down 0.7 per cent at 7,929.30. The fall was mirrored by the wider Standard & Poor's 500, which ended at 838.15, down 0.65 per cent, but the Nasdaq fought into positive territory in the afternoon to close up fractionally at 1,301.73.

In Europe, news of a shock interest rate cut in Britain, which the European Central Bank later declined to follow, failed to lift spirits but instead had some experts mulling whether the move had been sparked by expectations of more bad economic news. The monetary policy committee knocked a quarter point off rates, which had stayed at 4 per cent for more than a year.

London's FTSE 100 ended 2.22 per cent off while, in Dublin, the ISEQ was almost 1.3 per cent weaker. The Dow Jones Euro Stoxx 50 slipped 2.5 per cent at 2,169.88.

World oil prices hit fresh two-year highs as UN weapons inspectors said time was running out for Iraq to show it was disarming and winter fuel supplies in the US fell to critical levels. Brent crude oil in London hit $32.00 per barrel, its highest since December 2000, before slipping back to $31.45, up 8 cents on the day. - (Additional reporting Reuters)