There were also losses in Paris, where the CAC index fell by 1.37 per cent to 3,992.48 points and in Frankfurt, where the DAX fell by 98 points to 5,620.70. The Madrid index, Ibex-35, fell by 236.10 points or by 2.24 per cent to 10,259.20 points, and in Amsterdam, the AEX index fell by 23.19 points to 1,188.98, having fallen initially by 2.4 per cent to 1,183.47.Moscow's volatile stock market suffered too. The Russian Trading System index was showing a loss of about two per cent to 144.23 points.

It was a case of Wall Street sneezing and the rest of the world catching a cold after the Dow Jones tumbled by 3.4 per cent to 8,487.30 points, weakening Asian markets overnight.

London investors were also highly cautious ahead of anannouncement on Thursday by the Bank of England of interest rate policy for August, although most analysts believe the bank will leave the base rate at 7.50 per cent.The price of shares in Standard Chartered bank rose by seven pence to 634.5 pence a share, despite company results showing that the Asian crisis had helped reduce first-half pre-tax profits by four per cent to 416 million pounds (US$ 674 million). Cadbury Schweppes fell by 8.5 pence to 834.5 pence a share after reporting that although first-half, pre-tax profits had risen by 7.6 per cent to 254 million pounds, the fizz had been flattened by the strength of sterling.

GKN engineering fell 23.5 pence to 752 pence a share after reporting first-half pre-tax profits of 230 million pounds, up from 203 million pounds in the same period last year.