European equity markets closed off session lows on Wednesday, but small gains in the US during morning trade were not enough to take them higher.
The FTSE Eurofirst 300 closed down 0.9 per cent at 1,383.2. At its worst level of the session, the pan-European benchmark had been down 1.7 per cent at 1,372.15.
Frankfurt's Xetra Dax fell 1.3 per cent to 7,471.6, the CAC 40 in Paris was 0.5 per cent weaker at 5,225.4 and London's FTSE 100 was down 1.4 per cent at 5,942.9.
Reports carried by Bloomberg that the European Central Bank was considering a downward revision to eurozone growth estimates for 2008 added to the gloom.
Yves Merch, a member of the central bank's governing council, was quoted by the news agency as saying there could be "a moderation of growth inside Europe" adding that the bank should remain flexible on interest rates.
ASML (NASDAQ:ASML), the Dutch maker of memory chip manufacturing equipment, failed to be saved by its surprise rise in fourth-quarter profit, shedding 6.9 per cent to EU17.20 - one of the Eurofirst's biggest percentage losers.
Chip stocks were weaker across the board after Intel (NASDAQ:INTC) of the US warned after the Wall Street close on Tuesday that first-quarter revenue would be lower than analysts' estimates.
Infineon (NYSE:IFX), the German chipmaker, fell 3.7 per cent to EU6.44, while Franco-Italian group STMicroelectronics (NYSE:STM) lost 0.7 per cent to EU8.192.
Other high-growth stocks, particularly the alternative energy sector, fell as investors shied away from risk and favoured defensive drugs stocks.
Q-Cells, the German solar panel maker, fell 6.4 per cent to EU72.60 as Société Générale downgraded the stock to "sell" from "buy" and cut its target price to EU66 from EU98.
Analyst Didier Laurens said the stocks were currently overvalued, having been among the best performers over 2007. He added that there was also risk over a silicon shortage.
Norwegian solar panel maker Renewable Energy fell 5.5 per cent to NKr196.50, while Danish wind turbine producer Vestas Wind Systems shed 6.4 per cent to DKr429.
Dwindling opportunities for takeovers of Portuguese bank Millennium BCP following the appointment of a new chief executive were highlighted by brokers at UBS.
"The arrival (of new CEO Carlos Santos Ferreira) makes it unlikely BCP chooses to sell out anytime, removing the speculative element from BCP's stock," UBS said in a note.
Shares in BCP were down 6.8 per cent to EU2.48
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