European shares fell to a six-year low early on Friday as investors worried about further losses in the financial sector and data showed the British economy went into recession at the end of last year.
At 1010 GMT, the FTSEurofirst 300 index of top European shares was down 2.3 percent at 745.39 points, and had been as low as 742.53, its lowest since April 2003. The index is heading for its 12th session of decline in thirteen sessions. Insurers fell on worries they will be hit by losses. Swiss Re fell 13.9 percent, extending the previous day's heavy losses, on worries it could make further writedowns when it reports full-year results due Feb. 19, traders said.
"We do not comment on market rumours," a Swiss Re spokeswoman said.
Allianz, Aviva and AXA were down between 7.3 percent and 10.4 percent.
Banks, one of the worst performing sectors in 2008, took most points off the index. The sector has been hit by huge writedowns and worries that some banks may be nationalised.
BNP Paribas, Banco Santander, Barclays, Credit Suisse, Deutsche Bank, Lloyds, and Societe Generale fell between 1.9 percent and 13.9 percent.
Energy shares slipped as crude prices fell more than 3 percent to $42.28 a barrel. ENI, BP, Royal Dutch Shell and Repsol fell between 0.8 and 1.3 percent.
U.S. stocks slid on Thursday, after Microsoft's proposed job cuts and disappointing earnings shook investors, while economic data showed further deterioration in the labour and housing markets.
"Earnings have been as bad as expected," said Bernard McAlinden, investment strategist at NCB Stockbrokers. "The test is whether the markets have discounted that or not. But they seem to be taking it nervously."
"Many companies, like Microsoft, are not giving guidance, although that seems sensible. I don't know how anybody can guide at the moment."
Across Europe, Britain's FTSE fell 1.6 percent, Germany's DAX lost 2.6 percent and France's CAC slipped 2.4 percent.
UK IN RECESSION
The FTSEurofirst 300 benchmark index is already down 9 percent this year after a 45 percent fall in 2008, hit by a credit crisis that has helped to tip several major economies into recession.
This includes the UK, where recession is now official, data showed on Friday. Its economy shrunk 1.5 percent in the fourth quarter, the second successive quarter of contraction, the technical definition of recession.
Germany, Europe's biggest economy, is also in recession and is showing further signs of weakness in 2009. Germany's private sector contracted sharply at the start of the year, weakened by a steep decline in manufacturing sector output, polls showed on Friday.
Wall Street futures indicated more falls on Friday. Futures for the Dow Jones, S&P 500 and Nasdaq were down between 2.6 and 3.3 percent.
General Electric, a bellwether for the U.S. economy, is among companies reporting. Japan's Nikkei stock average lost 3.8 percent on Friday to mark its lowest close in two months after Sony Corp's warning of a massive loss fed fears about the electronics sector amid growing economic gloom.
