European stock markets suffered a second day of heavy losses as a recovery in US bluechip shares was outweighed by further weakness in the technology sector.
In a role reversal, the Dow Jones index of leading industrial shares closed 124.72 points (or 1.13 per cent) higher but markets chose to focus instead on the technology-laden Nasdaq index, which fell a further 0.62 per cent on top of Tuesday's drop of 5.5 per cent.
Amazon.com shares led the way down in the US, losing 13 per cent in early trading amid concerns that losses at the group were still rising. The company reported fourth-quarter sales of more than $650 million (€630 million), compared with $253 million in the 1998 fourth quarter and exceeding sales for all of 1998 of $610 million.
Nevertheless, chief financial officer Mr Warren Johnson said in a statement, "our higher seasonal sales will not translate into lower net losses in the fourth quarter".
The heavy sell-off in the US hi-tech sector extended across the Atlantic, dragging European markets down by 2 per cent as investors continued to worry about the impact of likely rate hikes on high stock valuations, even though the European Central Bank left all of its three key interest rates unchanged yesterday.
Shares in Dublin fell less sharply than elsewhere in Europe, insulated by their relative cheapness following last year's under-performance and the ISEQ's lack of exposure to the hi-tech sector.
The ISEQ closed 47 points (or less than 1 per cent lower) with signs of recovery in shares such as Bank of Ireland and Anglo Irish Bank late in the day.
In London, shares tumbled to a six-week low, with telecoms stocks accounting for more than half of the FTSE's 2 per cent loss. French shares also fell heavily, giving up more than 3 per cent of their value. But the German market was cushioned from deeper losses by strong gains in financial stocks as market speculation about a possible merger of HypoVereinsbank and Dresdner Bank sent their shares up 3.96 per cent and 4.32 per cent respectively.
The falls in European markets followed similar weakness in the Far East overnight as Asian stocks lost some of their new year fat in response to the drop on Wall Street.
Hong Kong stocks led the losers and the benchmark Hang Seng Index ended more than 7 per cent lower - practically an entire market correction in one day. It was the biggest points fall since October 1997, when the Asian currency crisis hit Hong Kong.
Tokyo stocks also ended sharply lower, losing 2.4 per cent.
