Shares in Vodafone, the UK's biggest company, have slipped to their lowest level in nearly two years amid continuing gloom over the telecoms sector.

The latest share price fall reflected growing investor unease about heavily-indebted telecoms firms as a whole rather than any bad news affecting Vodafone alone.

But it is a blow to many of the UK's small investors. Vodafone and British Telecom together knocked 34 points off the FTSE 100 index on Friday, pushing down the value of funds investing in the UK's leading companies.

The mobile phone group's shares closed at 216.25 pence, 9.75p or 4.3% down on the day and almost half their peak of about 400p hit last March.

Friday's close was the issue's lowest level since April 1999.

More potent

In other circumstances, investors might have been cheered by the news - emerging on Thursday - that Vodafone had made an indicative offer for Optus, Australia's number two wireless operator, potentially deepening its worldwide presence.

But more potent was the combination of factors that has led many European telecoms firms to lose half their market value over the past year.

These range from expensive new operating licences, high debts and slowing revenues to safety issues and the general gloom overshadowing the technology sector and the powerhouse US economy.

Although many firms reported strong profit and revenue growth during 2000, investors have taken fright at much more cautious forecasts for 2001.

Half-price Nokia

In the UK this week, BT has struggled to convince investors that its debt reduction plans are feasible while France Telecom was forced to slash its flotation price for Orange after seeing weak demand for the shares.

BT shares lost another 4% on Friday following the previous day's 9% drop, ending at 595p, while France Telecom dipped 1.25% in Paris.

Other European telecoms issues also suffered. Finland's Nokia - the world's biggest mobile phone maker - slid more than 9% to close at a 15-month low. The shares have now lost more than half of their value in about six months.

Friday's losses wiped $14bn off the company's market value.

Sweden's Ericsson, Germany's Siemens and Philips of the Netherlands were also substantially lower.

Trading in Orange shares is due to begin in London and Paris next Tuesday.