Swiss financials ran into blanket selling, after a profits warning from top insurer Zurich Financial ruffled sentiment in what is normally a remarkably staid corner of the European equity market.

The shares fell from the opening bell, reaching SFr833 before closing off 7.8 per cent at SFr852 in turnover which surged to SFr2.8m.

It was a performance that cast a deep cloud over the broad sector. Swiss Reinsurance lost 0.5 per cent at SFr3,721. Banks were badly hit. UBS fell 1.7 per cent to SFr284.50 and CS Group 1.9 per cent at SFr336. Julius Baer shed 2.5 per cent at SFr8,190.

Spanish utilities were again at the top of the performance charts helped by an early rumour that Germany's Eon was to launch a takeover bid for Iberdrola. Iberdrola jumped 6.5 per cent to €16.99 for a three-day net gain of 14 per cent. Eon shed 2.5 per cent at €56.68.

Union Fenosa, number three among Spanish power generators, rose 6 per cent to €22.90. Cantabrico hardened 0.6 per cent to €25.97.

Oil leaders pushed ahead firmly thanks to strong crude prices and a solid results statement from Royal Dutch. The sector was also boosted by positive broker comment on Repsol. Royal Dutch rose 1.4 per cent to €66.54 and Repsol, hit recently by worries about the management's acquisition ambitions, gained 4.4 per cent to €19.60. Total Fina Elf added 0.6 per cent at €158.50.

Hints from Michelin that trading margins were coming under pressure sent the motor equipment leader down 2 per cent to €40.25. But Valeo continued to gain on renewed takeover rumours after a big block of shares went through the market. The stock rose 4.8 per cent to €53.45.

Strong earnings from Puma made for a busy session for the German sportswear sector. Puma sprinted ahead by 11.1 per cent to 16. Larger rival Adidas-Salomon gained 1.5 per cent to €72.50.

Investors seemed to feel that technology and telecoms had been oversold in recent days and many shares rose yesterday.