Shares on Wall Street dropped on the back of poor corporate news, reversing some of Tuesday's strong rally.

The Dow Jones index spent much of the day fluctuating around its opening level, but fell sharply in late trade to close 183.18 points down at 7,755.61, a fall of 2.3%.

The sell-off in the US came too late to influence European markets, and the UK, French and German indexes all ended the day higher.

London's FTSE 100 index of leading shares closed up 107.8 points at 3,905.2, a rise of 2.8%.

Paris's benchmark Cac index ended up 112 points at 2,941, and Frankfurt's Dax closed 61.5 points higher at 2,926.7.

Corporate worries return

Investor confidence in the US was hit by a profit warning from Dow Chemical, the US' second biggest chemicals firm, which warned that higher oil prices were eating into earnings.

Shares in Cisco Systems also fell after the broker UBS Warburg said it was cutting its revenue forecasts for the firm.

Computer services firm Electronic Data Systems saw its shares fall by more than 11%. The drop followed the news that the company was cooperating with federal regulators in an informal inquiry over a recent profits warning.

Renewed fears about a possible war with Iraq also knocked sentiment.

"There is an awful lot of indecision, a lack of clarity as to where we are heading," said Tim Leach, chief investment officer for Wells Fargo's Private Client Services.

Weak Nikkei

Earlier on Wednesday, Japanese shares fell to take Tokyo's benchmark Nikkei index to a fresh 19 year low.

Japan's market slipped back in the afternoon from gains during morning trade as concerns spread about plans to accelerate the banks' write-offs of bad debts.

"Although an accelerated clean up of bad-loans is certainly a plus for the market in the longer term, banks and troubled borrowers look set to take a hit in the short term," said Hiroaki Kuramochi, head of equities at Credit Lyonnais.

The Nikkei closed down 1.23% at 9,049.33 points.