Corporate woes hit Wall Street

The Dow Jones share index closed down 295.67 points at 7,701.45 - a fall of 3.7%.

The mood failed to be lifted by official figures which showed that the US economy grew faster than previously thought in the April to June period.

Earlier in Europe the FTSE 100 index closed up 1.5% in London, the Dax fell 3.4% in Frankfurt while in Paris the Cac 40 edged 0.4% lower.

Profits under pressure

On Thursday the Dow Jones had climbed nearly 2% on hopes that the US economy was set to avoid a double-dip recession.

But a wave of bad news from major US companies saw all Thursday's gains reversed.

General Electric saw its share price fall by more than 7% to $24.47 after Lehman Brothers and Credit Suisse First Boston both cut their ratings on the company.

Shares in cigarette maker Philip Morris dropped by 11% after the company cut its profits forecast for 2002 late on Thursday.

Drug maker Wyeth saw its shares plummet nearly 20% to $31.10 after it warned that full-year earnings would be lower than expected.

And shares in Delta Air Lines descended 24% to $8.69 after the airline said losses would be bigger than expected in the third quarter, and announced plans to cut 1,500 jobs.

"We still have earnings problems, economic growth problems and international problems -- and until those get straightened out the market is not going to do anything," said James Volk, managing director of equity trading at D.A. Davidson and Co.

Growth revised upwards

The bad corporate news overshadowed official figures released earlier in the day which showed that the US economy grew faster than previously thought during the second quarter.

GDP, the widest measure of economic output, grew by an annual rate of 1.3% during the three months, a rise on the previous estimate of 1.1%.

The upward revision to the GDP figures was down to higher exports than previously calculated.

While the upward adjustment was welcomed, it still marked a big slowdown from the first three months of the year, when the US economy grew at an annual rate of 5%.

Separate data from the University of Michigan showed its final consumer sentiment index for September falling to 86.1 from 87.6 in August.

Despite the drop the figure was slightly better than expected.