US stock markets have held up well after a warning by technology icon Intel of disappointing profits pushed shares on major world stock markets to their lowest level since late last year.

Weak markets:

Tokyo, Nikkei: down 1.8% London, FTSE 100: down 0.75% Paris, Cac-40: down 1.9% Frankfurt, Dax: down 1.0% New York, Dow Jones index: down 0.4%

"The semiconductor sector got hit pretty hard today, but the rest of the market pretty much held up. That's good to see," said Mike Kayes, chief investment officer at Eastover Capital.

"But the big picture is still that the market needs to see earnings improve, and that hasn't happened yet."

The Dow Jones index of leading US shares fell 34.97 or 0.4% to close at 9,589.67.

The tech-heavy Nasdaq index fell 1.3% or 19.40 points to a close at 1,535.48.

The broader Standard & Poor's index 1.62, or 0.2%, to close at 1,027.53.

London's key index, the FTSE 100, hit an eight months low, and shares in European technology giants slumped as investors digested Intel's warning, made after the close of US markets on Thursday.

But European shares recovered about one third of lost ground in afternoon trade, as US stock markets opened without the heavy losses many had feared.

'Lousy sentiment'

Earlier, shares in Finnish mobile phone giant Nokia had fallen more than 8% to their lowest level for three years.

"Sentiment is lousy," a broker in Finland said. "Nobody really wants tech stocks."

And stock in rival mobile phone maker Ericsson plunged 6% to levels last seen in August 1996, with some observers predicting worse to come.

"It seems the bottom for the stock is somewhere between 12 and 15 crowns on a fundamental basis," a Swedish broker said.

The modest recovery in sentiment saw shares in London-listed mobile phone giant Vodafone claw back ground to close at 95p, down 1.5p, after earlier falling below 90p.

Buying opportunity?

Investors credited the share rebound in part to a report showing an unexpected fall in US unemployment.

"The little tickdown in the jobless number is a little surprising," said Carl Tannenbaum, chief economist at LaSalle Bank in Chicago.

US investors were also avoiding the temptation to sell shares wholesale.

Other analysts questioned whether Intel's report was being viewed with undue significance.

"The share price reaction by European chip stocks to Intel's news is overdone as there is positive news out there too," said Karsten Iltgen, a semiconductor analyst at WestLB Panmure in Dusseldorf.

And Beate Merdes, a fund manager at Invesco Asset Management, identified underlying buying pressure for shares in firms outside the technology sector.

"Investors are finding the valuations in European markets quite attractive but that is not the case with the tech sector," Ms Merdes said.