Weak US bonds and another bad day for the euro combined to send European markets steeply lower.

The FTSE Eurobloc 100 index fell 2.2 per cent to 1,321.74. The FTSE Eurotop 100 index lost 2.2 per cent to 3,472.17 and the FTSE Eurotop 300 index dropped 2 per cent at 1,498.38.

Frankfurt fell 3.3 per cent after some of the market's recent big hitters ran up against savage profit-taking. The Xetra Dax index came off 231.00 at 6,835.60.

Software leader SAP and electronics conglomerate Siemens, strong markets lately on tech-related enthusiasm, both fell more than 7 per cent, slipping €61.50 to €783.50 and €11.90 to €139.11 respectively. Deutsche Telekom lost €2.50 at €69.40.

Renewed interest rate concerns and the weak opening for US bonds fed the setback. Financials again fared badly. Deutsche Bank fell €1.54 at €77 and Desdner Bank €2.35 at €49.45. Munich Re tumbled €14.80 or 5.3 per cent to €266.15.

Paris ended lower, overshadowed by lingering worries about the scale of an expected rise in US interest rates, with the CAC 40 down 71.24 to 5,659.81.

Utility and telecoms group Vivendi bucked the trend as investors registered approval of its alliance with Vodafone AirTouch to create an internet portal. Vivendi owns 24.5 per cent of BSkyB which is 40 per cent controlled by Murdoch's News Corporation. Vivendi shares rose €5 to €105. Pay television group Canal Plus, in which Vivendi has a majority stake, was also up, €1.50 to €166.50.

Madrid was hit by Terra Networks, which marked its first day in the Ibex 35 index by sliding €7.50 or 7.9 per cent to €87. The index fell 174.2 to 10,835.1.

Amsterdam was among the day's heaviest casualties, sliding decisively through the 620 support level on the AEX index which closed off 20.08 or 3.2 per cent at 612.38.

Helsinki was under pressure ahead of Nokia's 1999 results today. The Hex general index closed 290.27 or 1.9 per cent lower at 14,992.53. Bourse bellwether Nokia lost 2.5 per cent to €185.40.

Milan finished with the Mibtel index 361 weaker at 28,404.