Europe pounded by Vivendi

LONDON, England (CNN) -- European markets tumbled to near nine-month lows on Tuesday as a negative start on Wall Street added to investors' jitters over leadership and accounting concerns at media giant Vivendi Universal.

London's FTSE 100 fell 3 percent to 4,546.8 and the CAC 40 blue chip index in Paris dropped 4.2 percent to 3,735.66, while Frankfurt's electronically traded Xetra Dax was down 3.9 percent to 4,197.21 in late trading (the German market was set to close at 1900 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, lost 3 percent to 1,042.78 -- levels not seen since last September. The media, information technology and computer services sub-sectors leading declines.

Vivendi Universal (PEX), the world's second-biggest media company, slumped more than 40 percent at one point in the session amid further doubts over the future of Chief Executive Jean-Marie Messier. (Full story)

The share slide began after debt rating agency Moody's Investor Services cut the company's debt to junk bond status late on Monday and accelerated as French newspaper Le Monde reported that the media conglomerate had attempted to massage its 2002 accounts, which Vivendi later denied. (Full story)

Vivendi's shares closed down 25.5 percent to 17.80 euros.

"Vivendi is just panic," Stuart Fraser, head of European equities at Standard Life Investments, told Reuters.

"It's the difference between U.S. GAAP [generally accepted accounting practices] and French GAAP. They moved to U.S. GAAP and who cares? But if you say anything you are going to be hit. There is just panic in the market."

France Telecom (PFTE) slid 6.9 percent to 11 euros amid conflicting comments from the French government about its plans to buy back the group. Early on Monday, a spokeswoman backed a Financial Times report that it may consider renationalising the debt-laden company but later retracted those comments. (Full story)

Orange (PORA), Europe's third-largest mobile phone group, fell 6 percent to 4.70 euros after buying a 71.25 percent stake in Egyptian consortium MobilNil Telecommunications from parent France Telecom for 324 million euros.

Nokia, the world's biggest mobile phone maker, lost 6.4 percent to 13.68 euros. Rival Ericsson fell 1.2 percent to 14.90 crowns after rising earlier as investors bet the company may be a likely candidate for a merger within the troubled telecoms sector.

Vodafone (VOD), the world's biggest mobile operator, fell 6.3 percent to 89.69 pence in London, while former BT Group mobile unit mm02 (OOM) lost 4 percent to 42 pence.

Philips Electronics, Europe's third-largest chip maker and biggest consumer electronics company, fell 6.9 percent to 25.90 euros. Infineon Technologies (FIFX), Europe's third-largest chip maker, was down 5.8 percent to 14.60 euros in late Frankfurt trading.

European aerospace group EADS (PEAD), which owns 80 percent of Airbus, slipped 1.1 percent to 15.60 euros -- after rising early in the session -- following an announcement by Airbus said it would deliver 300 aircraft in 2003, at the upper end of previous forecast. (Full story)

The AEX index in Amsterdam lost 4.1 percent, Milan's MIB30 index fell 2.9 percent and the SMI in Zurich declined 2 percent.

In the U.S. on Tuesday, the Nasdaq fell below the 1,400-point level after warnings in the software sector and brokerage downgrade on Dell Computer's sales estimates.

At midday, the Nasdaq composite index was down 27.24 points, or 1.9 percent, to 1,376.56, while the Dow Jones industrial average was down 84.31 points, or 0.9 percent to 9,025.48.