European Stocks Hit Hard As Markets Plunge

European shares fell sharply in early trading after Wall Street slumped to levels not seen since 1997 amid renewed concern about US accounting methods.

Healthcare, technology and media shares took the biggest hit as Vivendi Universal, Nokia and AstraZeneca all slid by between 3.5% and 5%. The FTSE 100 was down 90.5 points or 2% at 4,329.6, dipping below last week's five-year closing low at 4,393.

Drugs stocks took 14 points off the FTSE, with AstraZeneca down 3.4% and GlaxoSmithKline down 2.1%. In media stocks, the publishers Pearson lost 3.8% and Reuters shed 4.5% after the investment bank Morgan Stanley cut its rating on the news and information group to "underweight".

"We sure as hell are looking at a crisis. It seems like we're being hit from all corners, with Qwest being the catalyst," one senior trader told Reuters.

The latest blow to market confidence came yesterday when the US telecommunications company QWest announced that it was the subject of a criminal investigation. Following the news, the Dow Jones industrial average lost 3.1%, sinking to its lowest level since 1997. The latest stock market selloff has raised doubts about Great Universal Stores' planned flotation of its luxury fashion brand Burberry tomorrow.