European stocks fell sharply lower Thursday to close at their lowest level in two weeks after the European Central Bank held interest rates at 4.0 percent and the Bank of England cut by another quarter point to 5.25 percent.
ECB President Jean-Claude Trichet confirmed his determination to stall upward price pressure, when speaking at a news conference after the decision, but revealed that none of the rate-setting members had called for a rise.
However, Trichet said risks to economic growth were “on the downside”, sending the euro lower against the dollar.
Technology shares took a battering throughout the session after Cisco Systems CEO John Chambers said the company is seeing its U.S. and European customers becoming "increasingly cautious."
The grim outlook for tech stocks was compounded by German chipmaker Infineon, whichsaid its Com phone chips unit would remain unprofitable over the full fiscal year after it posted a first-quarter operating loss. Infineon's shares tumbled 13.6 percent on the news.
Deutsche Bank, which posted a better-than-expected pre-tax profit decline of 25 percent to 1.437 billion euros in the fourth quarter, bucked the banking sector trend and rose 0.4 percent.
Also on the earnings front, Unileverposted a profit rise of 6.1 percent, beating analysts’ forecasts and GlaxoSmithKline said sales fell 2 percent and forecast lower 2008 earnings due to falling sales of diabetes drug Avandia and increased generic competition.
- Reuters contributed to this report.