European markets were lower after a cautious session as investors awaited Fed chairman Alan Greenspan's testimony to Congress, which began as the bourses were closing.

Technology stocks continued to bear the brunt of the selling. Philips was sharply lower as it reported a 28 per cent fall in second-quarter net earnings.

The FTSE Eurobloc 100 index fell 1.11 per cent to 1,081.42, the FTSE Eurotop 100 slipped 0.8 per cent to 2,961.47 and the FTSE Eurotop 300 was down 0.7 per cent at 1,295.77.

Frankfurt continued to lose ground. The Xetra Dax index has lost 283 points, or 5.1 per cent, over the past three sessions.

Henkel was a rare firm feature, adding €2.40 at €66.90 as investors brushed aside lower interim results and concentrated on the forecast of a significant increase in full-year profits.

Amsterdam's AEX index was pushed down by steep falls for Philips and Royal Dutch.

Philips tumbled as second-quarter results came in at the bottom of the broker ignoring an upbeat outlook for the year as a whole, fell €7.55, or 7.6 per cent, to €92.05. Royal Dutch shed €1.20 at €57.65.

Paris rallied from early losses to end marginally lower, with media stocks lifted by news that Vivendi had increased its stakes in British Sky Broadcasting and France's Canal Plus.

Vivendi climbed €1.80, or 2.3 per cent, to €78.50 on news of the increase in stake, which heightened speculation of a merger between BSkyB and Canal Plus. Zurich was hit by profit-taking in Nestle and Roche, which both outperformed on Wednesday. The SMI index gave up 67.2 to 6,949.7.

Milan lost ground with investors reluctant to commit themselves ahead of the Humphrey-Hawkins testimony. The Mibtel index finished 76 weaker at 24,039. Against the trend, Alitalia put on 4.9 per cent to €2.64 after Mr Tiziano Treu, transport minister, said the flag carrier and its Dutch partner KLM were planning a share swap.