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Eurostocks off 3 pc by midsession; Baan tumbles

LONDON: European shares fell more than three percent by midsession on Tuesday as investors responded to Monday's slide in the Dow, and to bond yields rising to two-year highs on fears over likely central bank rate hikes.

The retreat was broadly-based, but previously high-flying technology and telecommunications stocks were hardest hit.

Dutch software maker Baan saw its shares slump 30 percent after it forecast a loss. Rival SAP was caught in the downdraft and was off 4.13 percent.

Consumer products, financials and energy shares also suffered heavy losses, the latter following a three-percent overnight fall in crude oil prices.

"People are waking up to the fact that has been pointed out to them for a few weeks now, that bond markets have been going south quite quickly and are indictating that we really do expect interest rate rises," said Jerry Evans, European strategist at Enskilda Securities.

"Equity markets have been ignoring that, but are now starting to factor it in. That is the primary reason (for today's weakness," he added.

Tech sector leader Nokia lost 8.71 percent while Finnish telecom operator Sonera lost 12.3 percent. Energy shares were led lower by a 4.9 percent fall in Shell Transport .

But Britain's high street retailer Marks and Spencer, recently out of fashion with investors, was one of the few major gainers, posting a 7.72 percent rise on speculation over a takeover.

National stock markets tumbled after registering all-time highs in the final couple of weeks of last year.

The Eurotop 300 index was off 3.43 percent. The Euro index of euro zone blue chips slid 3.37 percent.

No early respite was being seen as S&P March futures were off almost 10 points, indicating a lower start on Wall Street to extend the Dow's 1.21 percent fall on Monday amid rising yields.-Reuters