We're approaching crisis point with the Neuer Markt...all we've had is a constant flow of bad news

Market dealer

More than �3.6bn has been wiped off the stock market value of Marconi following a warning that its profits would be halved.

The news caused leading technology indices to fall around the world, with the UK's Techmark falling to all time lows, and Germany's Neuer Markt hitting its weakest level so far this year.

And the slump spread to the US, where the technology rich Nasdaq index lost 61 points to close at 2,080.

'Crisis point'

London's Techmark index of technology shares tumbled 4% or 67 points to 1,601 - its lowest close since the launch of the index in November 1999.

And Germany's Neuer Markt all-share index dropped below its year low of 1,403.51 during the day's trading session.

The day's heavy losses

ARM down 8% Logica down 6% Alcatel down 11% Ericsson down 7% Nortel down 5.5% Cisco down 8.3%

"We're approaching crisis point with the Neuer Markt. All we've had is a constant flow of bad news, including Marconi's profit warning last night," said one dealer.

The Neuer markt fell by 11% in the first quarter, after five consecutive quarters in decline.

It has now fallen 82% since its peak last March, while the value of its companies has sunk to 70bn euros from 234bn euros.

The Dow Jones Stoxx European technology index slumped 7% to its weakest level since March 1999.

The steep declines in technology stocks also impacted on the leading indices of blue-chip firms, with London's FTSE, Germany's Dax, France's Cac and the US' Dow Jones Industrial Average all ending lower.

Suffering peers

It all began when Marconi - whose shares hit �13.50 last year - said operating profit would be down 50% this year.

The company's share price dropped by a massive 54%, from 245p to 112.5p, as the London markets closed on Thursday.

Chief executive Lord Simpson described the last six months as "probably the worst in the history of the industry".

It has been hit by a severe downturn in the global market for telecoms equipment that has also taken a heavy toll on international rivals such as Nortel Networks, Alcatel and Ericsson.

US stocks took a pounding as the markets opened on Thursday, and many American investors were angry that Marconi made its announcement on the 4th of July public holiday.

Thursday closing prices

Nasdaq (US) down 61 FTSE (London) down 51 Cac (Paris) down 51.3 Dax (Frankfurt) down 16.53

Among other telecom parts and equipment makers hit in the US, Nortel lost 5.5% and Cisco ended down 8.3%.

In Europe, Alcatel was 11% lower, Ericsson dropped 7%, Nokia fell 4.6% and Siemens was down 4.7%.

In London, chip designer ARM was down 8%, Logica was down 6%.

Thursday's falls came on top of heavy falls on Wednesday.

Investors were wondering how much further technology stocks will fall before staging some sort of recovery.