US stocks close with big falls

The global share revival has well and truly ended

The US markets have reversed their small gains in the past days and plunged again with tech stocks leading the way down.

The Nasdaq index fell 6%, down 118 points at 1,854, and the Dow Jones Industrials ended a three day recover with a fall of 1.6%, down 162 points at 9,785.

The end of the brief global shares revival was sparked by the two profits warnings which came after US trading ended on Tuesday.

"A rally can't last one, two or three days. It should last longer... but more importantly it should broaden out. It should have more stocks participating and more new names coming to the fore," said Ralph Acampora, chief technical analyst, Prudential Securities.

"I call the market in search of a bottom," Mr Acampora says, adding that blue chip stocks may have seen their lowest point.

But with many major US corporations still to report their first quarter results, there are expectations of more profit warnings, putting further pressure on stocks.

Despite the losses both indexes remained above the two or three year lows reached last week.

Europe's decline

Wall Street's bleak mood ensured that European markets ended the day in the doldrums.

The telecom and general technology stock slump also sent Europe's markets sharply lower, erasing much of the strong gains from Monday and Tuesday.

London's benchmark FTSE 100 index closed 2% lower at 5,614.

In France the benchmark Cac 40 shares index ended 1.6% lower, with Germany's equivalent index, the Dax, down nearly 2%.

The bad news from technology companies dampened reports of a rise in US consumer spending from the non-profit business group, The Conference Board.

The results also put an end to a short-lived revival on the world's major markets, after shares spent Friday, Monday and Tuesday clawing back some of last week's losses.

'A dose of reality'

Today is a real test for the market

London dealer

"Today (Wednesday) is a real test for the market," said a dealer in London.

"The warnings brought a dose of reality after a sharp rally and now we will see whether confidence really has returned."

European rate cut

European shares will hope for a boost from a possible cut in interest rates by the European Central Bank.

The eurozone's central bank is widely expected on Thursday to reduce interest rates in the 12 countries that use the euro.

The move was signalled last week when ECB chief economist Otmar Issing, and Bank of France chief Jean-Claude Trichet, said the bank was no longer worried about inflation.

"While we were very, very concerned about inflation a month ago... we are not any more today," Mr Trichet told French radio.