Shares gloom deepens

European stock markets have extended their recent losses as fresh economic data dampened early hopes of a revival for US shares.

A host of stock markets - from London to Tokyo to America's technology-dominated Nasdaq - are all back at levels of two years ago.

Any hopes of a bright start in New York on Wednesday floundered as higher than expected inflation data for January sparked fresh worries about prospects for the world's biggest economy.

All three key US share indexes plummeted on Wednesday afternoon, after directionless trade in the morning.

Spiralling down

The flat start on Wall Street had helped European markets trim their early heavy losses, with London's benchmark FTSE 100 index closing 7.7 points down at 5972.4, its lowest level since April 2000.

In Germany and France the benchmark indexes both closed over 1% down - Frankfurt's Dax down 103.58 at 6,347.99 and the Paris Cac 40 down 110.38 to a new 13 month low of 5,474.37

That followed the overnight fall in Tokyo shares which pushed Japan's benchmark Nikkei 225 index to 28-month lows as it closed at 13,100.1.

The Dow Jones closed 204.3 points lower at 10,526.58 points, while the Nasdaq declined 2.13% to fall to 2268.93.

And the Standard and Poors futures index completed the bearish picture, closing 23.67 points lower at 1255.27.

The latest gloom began on New York's technology dominated Nasdaq stock market, which fell more than 4.4% on Tuesday.

FTSE below 6,000

Apart from one day in January, that was the lowest close for the Nasdaq since May 1999. It had fallen 5% on Friday, its previous day of trading.

Markets Wednesday close

FTSE 100: 5,972.4
(-7.71)

Dax: 6,347.99
(-104)

Cac 40: 5,474
(-110)

Nikkei: 13,100
(-148.3)

Dow Jones: 10,527
(-204)

Nasdaq: 2,269
(-49.4)

The decline in technology company share values has more than halved the Nasdaq stock market's worth in the past year - wiping more than $3,500bn off the value of shares listed on it.

That has hit consumer confidence, sending shudders through the world's biggest economy and pulling down company valuations across the world.

The effect was market in London where the FTSE 100 index closed below the key 6,000 level on Tuesday and Wednesday for the first time since April 2000.

US malaise

FTSE facts

Closed on Tuesday at lowest level since Oct 1999

All time closing high: 6,930.2 (30 Dec 1999)

Last time closed below 6,000: 17 Apr 2000

Performance in 2000: -10.2%

Performance so far in 2001: -3.9%

Source: Datastream/ICV

Hopes that there might be a recovery for European stocks when New York markets opened on Wednesday were dashed by worse than expected inflation figures in the US.

This built on the existing pressures.

John Forelli, senior vice president at Independence Investment Associates said: "Earnings have come in weak and it seems like investors are losing confidence that Corporate America is going to pull us out of this slowdown.

"They are focusing more on the consumer doing it now."