Share markets in Europe tumbled to fresh 30-month lows yesterday as a combination of negative US economic indicators and fears for telecoms and the financial sector fall-out gnawed at fragile investor confidence. On the week, Frankfurt racked up a net loss of 8.5 per cent, while Paris came off 6 per cent as traders settled in after their August absences only to find that the mood, sombre ahead of the holiday period, had taken a turn for the worst.

Yesterday, following grim jobless figures for August, the weakness of the US economy returned to the top of the agenda and sparked talk of further monetary easing by the Federal Reserve.

Tumbling equity markets and scare stories concerning bad debt and claims experience kept the selling pressure on the financial sectors and banks and insurance stocks were among the day's worst performers. Life insurance groups led the way down. The sector has become increasingly reliant on equity-linked products in recent years.

And with the downturn for global share markets showing signs of reaching critical mass, sector sentiment is taking a pounding.

Banking leaders were equally exposed to the day's selling pressure. Deutsche Bank fell 5.2 per cent to €67.15 and HypoVereinsbank 6.6 per cent to €39.70. ABN Amro came off 4.9 per cent to €18.69, Societe Generale 2.9 per cent to €61.75 and Fortis 4.2 per cent at €27.90.

Telecoms stocks had another volatile session, extending the sector's underperformance against the market since April to about 22 per cent. France Telecom dipped briefly below the €27.70 at which it was floated in 1997 and Deutsche Telekom came within a whisker of the €14.57 that the institutions paid when the German leader went public in 1996. The former ended all square at €28.80 but Telekom shed 3.6 per cent at €14.96 in 21.4 million shares traded amid signs that flowback from US shareholders had moved up a gear. Nokia fell 6.5 per cent to €14.20.