LONDON (CNNfn) - Stocks plummeted in Europe Monday, although resilience on Wall Street helped the region's markets close above their lows for the session.
Technology, telecom and media firms bore the brunt of the selling in Europe Monday, in a backlash against "new economy" companies that have driven the markets higher recently.
In London, the FTSE 100 dropped 1.55 percent to 6,466.6 as financial and computer-related issues led the market lower. In Frankfurt, technology stocks were among the biggest decliners despite a dazzling stock market debut for a chipmaker floated by Siemens. The Xetra Dax index lost 3.5 percent, or 282 points, to 7,693.85. In Paris, the CAC 40 tumbled 173 points to 6,336.93 while Zurich's SMI fell 1.8 percent to 6,781.1, a new low for the year.
"It is the media area where the differential performance has been greatest and where we feel the valuation gaps across the Atlantic now look most extreme," Ian Scott, European equity strategist at Lehman Brothers, told Reuters.
Steep declines overnight in Asia battered leading indexes in Tokyo and Hong Kong and led to a gloomy beginning in Europe Monday. Selling strength gathered pace throughout the session until investors breathed a sigh of relief at signs of resilience in the United States, following early sharp falls. The Nasdaq composite was briefly down more than 4 percent Monday.
At one stage the FTSE 100 was almost 3 percent lower, but it clawed back some of its losses once investors saw that Wall Street wasn't going into meltdown.
Technology stocks succumbed to selling pressure in London. Chip designer ARM Holdings (ARM) led the way, helped to a near-8 percent slide by a strong "sell" recommendation from brokerage house Nomura. Computer services provider Misys (MSY) fell 5 percent. The real casualties were London-listed South African companies, which had a hard time as the rand and the Johannesburg exchange suffered a beating. Miners Anglo American (AAL) and Billiton (BLT) both declined more than 6 percent, and insurer Old Mutual (OML) was similarly lower.
One of the few bright spots in London was drug firm AstraZeneca (AZN), whose shares gained 3.7 percent on hopes for anti-ulcer treatment Nexium, which got Swedish drug authorities' approval to go on sale three months earlier than previously expected. AstraZeneca's (AZN) positive announcement fed through into gains for merging rivals Glaxo Wellcome (GLXO) and SmithKline Beecham (SB-).
Plumbing products firm Wolseley (WLY) staged a comeback after falling almost a fifth over the past week following news that it is to be kicked out of the FTSE 100. The hammering appeared overdone Monday, with the stock recouping more than 7 percent.
At its worst, Frankfurt was some 350 points down on the session, although it too found succor in Wall Street's refusal to buckle. Tech firms took a real beating however, with components maker Epcos (FEPC) down 6 percent and Siemens (FSIE), the electronics and engineering company that floated Epcos last year, dropping 7 percent, even as shares in its chip making unit Infineon (FIFX) doubled on their first day of trading after an initial public offering. Infineon seems certain to enter the Dax index when the constituents are next rearranged.
Related firms fared poorly however, amid concern over the slumping U.S. tech stocks and indications German investors may sell shares to raise funds to invest in Infineon. Business software provider SAP (FSAP) fell 5 percent.
Also pulling the Dax lower were bank stocks, as the groundbreaking Deutsche Bank merger with Dresdner Bank continued to attract flak from investors. Both stocks fell sharply, extending last week's losses, and insurer Allianz (FALV), which brokered the deal, slumped 4 percent.
In Paris gloom surrounded the technology and media firms that had spearheaded the market's gains last week. Pay-TV operator Canal Plus (PAN) slumped more than 10 percent, and parent Vivendi (PEX) closed 4 percent into the red. Data communications operator Equant (PEQU) crashed 5 percent, and the likes of Cap Gemini (PCAP), Lagardère (PMMB) and Alcatel (PCGE) all were similarly depressed. French stocks did not enjoy the mini-recovery seen elsewhere because the market shuts 30 minutes earlier and was closed as Wall Street began to revive.
LVMH (PMC) was the CAC 40's biggest gainer, up 5 percent, after investment bank Goldman Sachs advised investors to buy the shares and raised its earnings estimate. Carmakers rallied, with Renault (PRNO) and PSA Peugeot Citroën (PUG) both rising. The stocks were aided by reports that Italy's Fiat would announce a tie with General Motors (GM: Research, Estimates) later Monday. Fiat stock was suspended in Milan. 
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