Markets at 1840 GMT

London (close): FTSE -0.8% Paris (close): Cac -1.5% Frankfurt: Dax -0.5% New York: Dow Jones -0.1%

By the close the FTSE 100 index of leading shares was down 42.1 points at 5089.3.

On Tuesday the FTSE fell 92.2 points - its biggest drop since early December - while in the US the main Dow Jones index slumped 2.5% to 9,618.24.

On Wall Street on Wednesday the Dow made a cautious start, and by early afternoon it was down 9.55 points at 9608.69.

Stocks failed to be inspired by news that the US economy grew by 0.2% during the final three months of 2001 compared with the same period one year earlier, defying expectations of a contraction.

Accounting concerns

Tuesday's fall in the Dow was put down to growing doubts among investors about the soundness of company accounting following the revelations at Enron.

"What's driving it is mainly concerns about accounting issues. Investors are clearly worried about more skeletons in the closet," said Stephen Carl, head of US equity trading at Williams Capital Group.

The worries overshadowed positive news on consumer confidence and durable-goods orders that had emerged earlier in the day.

Telecom gloom

The filing for bankruptcy protection by the US telecoms group Global Crossing on Monday has continued to spread gloom across the sector.

In the UK Cable & Wireless continued to suffer from the fallout. Its shares ended the day down 7.6% at 267.25p.

Shares in the mobile operator mmO2 finished down 4.1% at 76.25p, while Vodafone was 2.6% lower at 150.25p.

Banks suffer

The FTSE was also dragged down by a poor performance from the banking sector.

Shares in Northern Rock dropped 5p to 666p despite reporting an 18% rise in profits last year.

Abbey National slid 10p to �10.40 and Barclays fell 55p to �21.86.

"Markets have been trading in a sideways fashion since November and now they are looking for an excuse to sell off, " said Mark Tinker, global head of debt and equity strategy at Commerzbank.

"The results season is being used as an excuse to take profits."