The sell-off in technology, media and telecommunications stocks carried through into Europe yesterday after sharp falls in the US and Asia earlier in the week.
The slide affected both the Europe-wide technology sector indices and local markets most associated with the high technology boom: the Neuer Markt in Frankfurt was off 8 per cent; the Nouveau Marche in Paris fell 9.8 per cent; and the Techmark 100 in London lost 7.8 per cent, the largest drop since its creation in November.
But investors said it was premature to talk of the European "Internet bubble" bursting. Mr Keith Skeoch, chief investment officer at Standard Life Investments, said: "We are seeing a correction to some of the extremes of valuation that were put in place in the first few weeks of the year. It is far too early to say that we have started something more meaningful."
The apparent end of Europe's first rush of Internet euphoria echoes events in the US nearly a year ago, when Wall Street's wave of enthusiasm for online companies was followed by a sharp reversal. The Goldman Sachs Internet index, which had jumped five-fold over the previous six months, fell 40 per cent.
US Internet stocks recovered, though, as a new generation of infrastructure and e-commerce companies emerged.
The US technology sector has also slipped this week. After Monday's Asian sell-off of technology, media and telecoms stocks, the Nasdaq composite index in New York dropped 200 points, its second-biggest points decline. Nasdaq wobbled again yesterday, leaving it another 124 points lower at the close.
European investors were made more nervous by the release of Merrill Lynch's global survey of fund managers, which found that 73 per cent thought the technology, media and telecoms sectors were overvalued. Most expected to cut their exposure this year. In the UK, Lastminute.com, the online booking agent which floated amid initial euphoria on Tuesday, dropped 75p to 412p yesterday.
