While the US data helped improve sentiment in Europe considerably, technology stocks suffered after Mr Kurt Hellstrom, Ericsson chief executive, told a conference in London: "No one can tell when we will see an end to the downturn." Ericsson's shares fell almost 11 per cent to SKr45.60.
Mr Hellstrom's remarks came on top of the profit warning by Marconi, its second in two months. In the morning stocks such as Alcatel and Nokia were substantially lower, although the losses were pared back in the afternoon.
Mr Hellstrom promised further restructuring if things did not improve. "We will take further action if this becomes necessary to get back to profitability," he said.
Ericsson's rival Nokia has in recent days been the target of rumours about a possible profit warning. However, yesterday Mr Bruce MacDonald, an analyst at Deutsche Bank, said: "The probability of Nokia having to pre-release is relatively low, in spite of poor trading conditions . . . we struggle to see earnings momentum deteriorating significantly further, and believe that at current levels the share price very much reflects a 'trough' valuation." Nokia yesterday closed at €17.25, a rise of 0.2 per cent.
Yesterday also heard talk of a profit warning at Cap Gemini Ernst & Young, the French IT services company. The shares fell 1.8 per cent to €68.05, their lowest level since December 1997. At one point they were down 6 per cent.
The gloomy news from Ericsson hit telecoms stocks. KPN continued its remorseless falls, losing another 8.8 per cent to close at €2.69. France Telecom, which was dropped from the Stoxx 50 index on Monday night because its market capitalisation was no longer enough to qualify it for inclusion, rallied in late trade to end 1.2 per cent higher at €34.15. In Italy, Olivetti fell 6.2 per cent to €1.46 as investor concern about debt levels caught up with the stock.
