Europe tumbles 5 percent

Traders were flooded by sell orders as investors dumped stocks on Friday

LONDON, England (CNN) -- European markets tumbled to a finish on Friday, as a poor start on Wall Street added to the selling frenzy that was fuelled by Ericsson's weak results and its plans for a massive discount share sale.

London's FTSE 100 fell 4.6 percent, or 199 points, to 4,098 and the CAC 40 blue chip index in Paris dropped 5.4 percent, or 189.67 points, to 3,324.04, while Frankfurt's electronically traded Xetra Dax was down 5.1 percent, or 209.8 points, to 3,890.85 in late trading (the German market was set to close at 1800 GMT).

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was down 4.8 percent, with the information technology, insurance and pharmaceutical sub-sectors leading declines.

"What markets need is direction and, more than anything else, confidence," Roland Lescure, head of strategy and research cne at CDC Ixis Asset Management, told Reuters.

"The markets are cheap but that doesn't mean it's going to go up from here. That's going to take time."

Ericsson, the world's biggest supplier of equipment to power mobile phone communications, plunged 18 percent to 11.90 crowns after posting its seventh straight quarterly loss and said sales would fall by 15 percent this year.

The Swedish company also announced another 5,000 job cuts and priced its $3.2 billion share sale at a 74 percent discount to Thursday's closing price. (Full story).

Finnish rival Nokia, the world's biggest mobile phone maker, fell 5.8 percent to 12.90 euros, while Siemens (FSIE), Germany's biggest electronics and engineering group, was down 6.2 percent to 54.98 euros in late Frankfurt trading and Europe's biggest phone equipment maker Alcatel (PCGE) dropped 12.5 percent to 6.30 euros.

Vodafone (VOD), Europe's biggest mobile phone operator, fell 5.5 percent to 97.25 pence. France Telecom (PFTE), the country's dominant phone company, lost 7.4 percent to 14.22 euros, while Europe's biggest phone company Deutsche Telekom (FDTE) was down 4.5 percent to 12.05 euros in late trading.

Epcos (FEPC), Germany's biggest electronics component maker, plunged 15.5 percent to 22.35 euros. The company said it expected a full-year double-digit million euros operating loss, after previously forecasting a profit. (Full story)

Infineon Technologies (FIFX), Europe's second biggest chip maker, fell 3.5 percent to 16.8 euros after it said it trimmed its losses in third-quarter due to reduced costs and a slight pick-up in demand. (Full story)

Europe's No. 1 chipmaker STMicroelectronics (PSTM) lost 6.5 percent to 24.34 euros.

"The Infineon numbers were not great, reflecting a weaker pricing environment, but shouldn't surprise," Martin Brooker, pan-European strategist at E*Trade Securities, told Reuters.

"Earnings still need to catch up with the economic cycle. People have been talking about 'disconnect', but stocks have continued to fall and this is influencing economic data."

Abbey National (ANL), the struggling British mortgage bank, slipped 0.3 percent lower to 695 pence. That followed the announcement that Chief Executive Ian Harley had resigned, one month after he issued a profit warning which fuelled speculation that Britain's second largest mortgage lender could become a takeover target. (Full story)

The AEX index in Amsterdam fell 4.8 percent, while the SMI in Zurich declined 5.6 percent and Milan's MIB30 lost 4.1 percent.