US share revival peters out

An early fightback on US stock markets petered out on Thursday as the high-tech dominated Nasdaq index sunk to a two year low.

The Dow Jones Industrial Average, which includes America's 30 biggest companies, closed up 9 points at 9,794, with strong gains in the pharmaceutical sector offsetting losses elsewhere.

The Nasdaq index slumped to a 29 month low, losing 32.09 points at 1,822, wiping out all of its gains from the rally which began last week.

Among the big decliners were internet equipment maker Cisco Systems, JDS Uniphase and Juniper Networks after Nortel Networks said it would lose more money than expected in the current quarter.

Traders also reacted nervously to the news that the US economy had grown even slower than previously thought in the last quarter of 2000.

New figures showed that America's GDP rose by just 1% annually in the period between October and December, compared to a growth rate of 5.6% just six months earlier.

Europe hit

Technology companies also pulled European markets lower, before signs of a US fightback sparked a rebound.

London's benchmark FTSE 100 index, which had been down nearly 1.2% with half an hour of trading to go, closed down 0.4% at 5,588.

In Paris and Frankfurt there had been bigger falls before the rally halped the French Cac 40 index close up 0.2%, while the German Dax index was 0.8% higher.

European traders did not get the desired boost from a European Central Bank, which kept interest rates unchanged.

Earlier Asian markets had followed the downward trend sparked by profits warnings from Nortel and Palm on Tuesday evening in New York.

Asian falls

Japan's leading Nikkei index lost more than 5% of its value, plummeting 693 points to 13072.

That was a sharp reverse from the Nikkei's 13% worth of gains over the last six sessions, gains prompted by the Bank of Japan's decision to return to zero interest rates.

A smaller-than-expected rise in industrial output and poor financial results from Hong Kong's internet and telecoms giant PCCW fuelled the falls.

Hong Kong's Hang Seng index also fell, losing 168 points to close at 12684.