Europe's technology and telecommunications shares retreated for a second day in the wake of worries about the US economy.

Infineon fell 8 per cent, Alcatel 6.2 per cent and KPN 6.6 per cent.

Deutsche Telekom gave details of its third-quarter figures which showed a 20 per cent rise in earnings before interest, tax, depreciation and amortisation, more than expected by analysts. Deutsche Bank, for instance, had forecast under 12 per cent.

T-Mobile contributed heavily, doubling its EBITDA to €807 million out of group total of €4.1 billion. It posted a pre-tax loss of €1.6 billion, largely due to amortisation of goodwill for the US mobile operators VoiceStream and Powertel. T-Mobile, due to be floated this year, is now slated for next year.

By late in the day Deutsche Telekom shares were down 3.3 per cent at €18.21. While they rose smartly with the whole sector following September 11th, they have now fallen 10 per cent in the last 10 days. They are being pressured not only by the MSCI reweighting tomorrow night but also by the ending on Saturday of another lock-up for shares which changed hands in the VoiceStream takeover.

In a research note, ABN Amro said management had delivered on its promise to improve performance. "The most critical issue to DT's share price over the next week and the next few months is the unwinding of the VoiceStream share overhang . . . a share price below €17 should be seen as a strong buying opportunity."

France Telecom managed to stay in the black but its internet company Wanadoo lost another 2 per cent to €5.53 on top of Tuesday's 14.4 per cent following news of a 50 million share placement by Dixons, the UK retailer. Analysts at Dresdner Kleinwort Wasserstein, however, said the placement was positive for Wanadoo in the longer term. It reduced the technical pressure on the stock by rescheduling the lock-up periods for Dixons' stake.