Deutsche Telekom came close to free-fall as the stock overhang concerns that have dogged sentiment all week triggered a wave of program selling.
Negative broker comment added to the upheaval. The stock fell to &€8364;18.75 before closing at &€8364;19.40, down 4.4 per cent and a low for the year.
The bleak mood spread right across the sector with a UBS Warburg downgrade from "buy" to "hold" for Telekom and Telefonica adding to overall distress.
France Telecom fell 5.1 per cent to &€8364;45.02 and Telefonica 3.7 per cent to &€8364;12.63. KPN lost 6.4 per cent at &€8364;4.70.
Among equipment makers, Nokia stock fell 4.8 per cent to &€8364;20.95 for a two-day decline of 13.7 per cent. Alcatel came off 2 per cent at &€8364;17.88.
Adidas Salomon, down steeply on Thursday, rallied 3.6 per cent to &€8364;75.07 after the sportswear leader denied market rumours that it planned a rights issue.
Insurer Allianz fell 1.7 per cent to &€8364;316.20 in spite of an increased weighting in Goldman Sachs' model portfolio.
Aegon, however, jumped 3.6 per cent to &€8364;34.25 as Morgan Stanley Dean Witter raised its recommendation on the stock. French insurer AGF was another strong performer, encouraged by the Goldman Sachs upgrade for the sector and the performance of Aegon. AGF's shares rose 3.4 per cent to &€8364;63.30.
Bayer ended a miserable week with further losses. The shares, which staged an early rally as investors covered short positions, fell to close 2 per cent lower at &€8364;36.25, taking losses over the past three sessions to 20 per cent.
Spanish biotech group Zeltia soared 11.1 per cent to &€8364;10.78 on news of an agreement with Johnson & Johnson, the US healthcare company, to market its promising cancer treatment, ET-743.
