LONDON (CNNfn) - Chemical companies dragged down European stock markets Friday on concern that their profitability would be crimped as oil prices hovered near a 10-year high. Technology and telecom stocks crumbled as the tech-heavy Nasdaq in the U.S. tested the 4,000-point level.
Imperial Chemical Industries (ICI) extended Thursday's losses, dropping more than 3.58 percent to drag London's FTSE 100 index down 1.3 percent, or 88.5 points to 6,591.5. ICI's U.S. rival DuPont Co. (DD: Research, Estimates) warned Thursday that higher-than-expected energy and raw material costs would keep its earnings below analysts' forecasts this year and next.
Frankfurt's Xetra Dax index shed 105.57 points, 1.43 percent, to 7,267.77, with chemicals firm Bayer (FBAY) sliding 3.4 percent and rival BASF (FBAS) slipping 1.7 percent.
The blue-chip CAC 40 in Paris dropped more than 1.9 percent, or 131.1 points, to 6,703.36, with Air Liquide (PAI) sliding 6.4 percent, after some analysts said the industrial gases firm's 14 percent rise in first-half profit was less than they had expected. The company blamed the disappointment on higher interest costs. British rival BOC Group (BOC) declined 4.5 percent.
 Elsewhere, Amsterdam's AEX index fell 1.2 percent, Zurich's SMI index slipped 0.6 percent, and the MIB 30 index in Milan lost 1.4 percent.
The broader FTSE Eurotop 300 index, a basket of Europe's largest companies, lost 1.5 percent to close at 1,670.59. The prospect of greater output from OPEC oil producers drove down shares of major oil companies, driving the oil and gas sub-index down 1.8 percent, while the chemicals sector dropped 2.7 percent. The technology sector fell 3.5 percent and telecoms slipped 2.5 percent.
U.S. markets headed lower Friday, with the Dow Jones industrial average slipping 0.5 percent while the Nasdaq composite slipped momentarily below the 4,000 level, and was last down 1.8 percent at 4,023.38 in midday trade.
In the currency market, the euro strengthened slightly against the dollar to 87.56 U.S. cents from 87.42 in late New York trade Thursday.
Oil companies weakened ahead of this weekend's meeting of OPEC ministers in Vienna. The oil moguls are expected to increase oil output to try to ease crude oil prices, which in recent weeks have soared to near three times the level of a year ago.
 Among decliners, TotalFina Elf (PFP) shed 2.4 percent in Paris, affected also by a gas station blockade in France, while BP Amoco (BPA) slipped 1.4 percent and Shell Transport and Trading (SHEL) dropped more than 1 percent in London. Oil producers benefit from higher prices for crude oil, although their refining subsidiaries suffer badly.
Technology and telecom stocks fell. Vodafone AirTouch (VOD), the world's biggest mobile phone operator, fell 2.4 percent, British Telecommunications (BT-A) slipped 1.3 percent and business telecom operator Colt Telecom (CTM) shed 5.7 percent in London. France Telecom (PFTE) declined 3.6 percent and data network operator Equant (PEQU) dipped 3.3 percent and Deutsche Telekom lost 1.8 percent.
Telecom equipment markers also declined. Mobile handset maker Nokia dipped 3.8 percent in Helsinki, Marconi (MNI) slipped 4.7 percent, and Alcatel (PCGE) dropped 3.7 percent.
Optical fiber component maker Bookham Technology (BHM) lost 2.6 percent, chip designer ARM Holdings (ARM) fell 1.6 percent, chipmaker Infineon (FIFX) slid 3 percent, parent Siemens (FSIE) declined 4.2 percent, and Europe's biggest software house SAP (FSAP) shed 3 percent.
Hotel and catering company Granada Compass (GCP) slumped 8.5 percent after a report said the firm's corporate brokerage had lowered its profit forecast for the company. The stock was earlier down more than 11 percent from Thursday's close. French rival Sodexho Alliance (PSAN) declined 3.6 percent.
Shares in automation and control firm Invensys (ISY) extended Thursday's 36 percent drop, declining 7 percent after issuing a profit warning.
In Amsterdam, shares of Dutch Internet service provider World Online jumped 6.6 percent after Italian counterpart Tiscali agreed to a $5.1 billion buyout of the company. In Milan, shares of Tiscali edged up 0.1 percent. 
-- from staff and wire reports
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