LONDON (CNNfn) - A late sell-off for telecom stocks drove Europe's leading markets into the red Friday after a stronger-than-expected U.S. economic report revived speculation that recent interest rate hikes may not have cooled the economy as first thought.
U.S. gross domestic product rose 5.2 percent in the second quarter, far outpacing economists' forecasts and reviving the possibility U.S. Federal Reserve policy makers could seek to raise short-term interest rates later this year to cool the economy. Wall Street has been a driver for Europe's top bourses in recent months, particularly in the tech and telecom sectors.
In Paris, the CAC 40 index closed down 95.81 points, or 1.5 percent, to 6,415.72. Five of the leading six decliners were companies connected to the telecom sector, with network operator Equant (PEQU) suffering the biggest drop, off 9.3 percent. The CAC fell less than 0.1 percent on the week. 
The Xetra Dax in Frankfurt also went into reverse, falling 61.53 points, or 0.86 percent, to 7,121.91 in late trade despite pockets of strength among "old economy" banking, automobile and utility stocks. Epcos (FEPC), an electronics components maker, sank 6.3 percent to lead losers on top of Thursday's 10-percent drop. The top five losers were tech or telecom companies.
London's benchmark FTSE 100 index fell 16.4 points, or 0.3 percent, to close at 6,335.7, with broadcaster United News & Media (UNMS) plunging more than 12 percent after agreeing to sell its television assets to rival Granada Media (GME) about £1.75 billion ($2.6 billion). For the week, the FTSE was also down less than 0.1 percent.
The SMI in Zurich nosed up 5.2 points to 7,997.8, with chocolates and food conglomerate Nestlé rising 2.6 percent. The index was up 1.2 percent on the week. 
The pan-European FTSE Eurotop 300, a broad index of the region's largest stocks, shed 0.4 percent, with its telecom sub-index falling 3.2 percent and its electronics component off 2.5 percent. The food products sub-index rose 2.1 percent behind a 6.1-percent rise for France's Danone (PBN).
As trading on most of Europe's bourses ended, the U.S. Nasdaq composite index was down 3 percent and the Dow Jones industrial average shed 0.6 percent.
In the currency market, the euro slipped to 92.50 U.S. cents from 93.17 cents in late trading in New York Thursday.
"Old economy" strength
On the Frankfurt exchange, German-U.S. carmaker DaimlerChrysler (FDCX) rose 1.4 percent and rival Volkswagen (FVOW) rose 2.7 percent.
But French automaker Renault (RNO) sank 5.1 percent after it reported late Thursday half-yearly operating profit fell to  1.1 billion ($1 billion) from 1.2 billion a year earlier.
Among other "old economy" issues, utility E.On (FEOA) rose 4.4 percent, leading Dax gainers, while utility RWE (FRWE) rose 1.3 percent. 
In the drug sector, SmithKline Beecham (SB-) rose 2.7 percent. French life sciences company Aventis (PAVE) added 4.9 percent after reporting drug revenues increased in the first half of the year while sales of agrochemicals slipped. Germany's Bayer (FBAY) added 2.5 percent and rival BASF (FBAS) rose 1 percent.
The biggest spills came in the technology and telecom sectors. In Frankfurt, Deutsche Telekom (FDTE), the most heavily weighted company in the Dax, shed 4.1 percent.
Phone stocks lose their appeal
In London's telecom sector, Vodafone AirTouch (VOD), the world's biggest mobile-phone service firm, shed 3.9 percent, and business telecom operator Colt Telecom (CTM) dropped 6.5 percent. Telecom network operator Energis (ENE) lost 8.5 percent.
In Paris, companies with mobile-phone interests all declined. Vivendi (PEX) lost 2.6 percent, Bouygues (PEN) dropped 3.6 percent and France Telecom (PFTE) lost 1.5 percent. Data network operator Equant (FEQU) shed 3.1 percent. Telecom equipment maker Alcatel (PCGE), the star performer Thursday in Paris, lost 3.9 percent.
That came a day after Finland's Nokia, the world's biggest mobile phone maker, plunged more than 21 percent after warning third-quarter earnings would be lower than those in the second quarter. On Friday, Nokia shares gained back 4.3 percent. 
Among top tech stocks, Cap Gemini (PCAP) shed 1.9 percent in Paris, while Europe's biggest software maker, SAP, [FSE:FSAP3] also fell 1.9 percent in Germany.
Electronics and engineering company Siemens (FSIE), the parent company of Epcos, fell 3.8 percent, while Siemens' chip making subsidiary, Infineon Technologies, (FIFX) fell 4.5 percent.
Leading gainers in London was hotels operator Hilton Group (HLT), up 4.3 percent. Recently battered cable firm Telewest Communications (TWT) rose 3.4 percent. 
-- from staff and wire reports
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