Technology stocks move European markets down on Wednesday, after Intel cut its profit margin forecast yesterday.

By mid morning, the FTSE Eurotop 300 was down 0.8 per cent to 973.99, while Frankfurt’s Xetra Dax shed 1 per cent to 3,864.32. In Paris, the CAC-40 declined 0.6 per cent to 3,632.63, and London’s FTSE 100 was 0.6 per cent lower at 4,331.3.

But any enthusiasm for the US-listed chipmaker was crushed after the company warned that inventories rose, forcing it to cut its profit-margin forecast for the full year to 60 per cent from 62 per cent. Intel shares fell nearly 5 per cent in after-hours trade.

In Europe, ASML, the Dutch maker of chip manufacturing equipment, was down 1.5 per cent to €12.83 despite beating expectations with second-quarter net profit of €65m. The company said it had an order backlog, which included 147 new machines, worth €1.8bn and said it expected positive market conditions "well into 2005".

But the negative pull of Intel’s profit margin woes was too much. "Margin pressure from the semiconductor sector’s bellwether giant, Intel, does not paint a pretty picture for weaker peers," said Sean Murphy at Nomura, the brokerage. "We believe we’re still stuck in a mode where revenue growth can be achieved but pushing customers to grant price rises is exceptionally difficult."

STMicroelectronics, the French chipmaker, was down 2.2 per cent to €16.56, while German peer Infineon lost 3.3 per cent to €9.49. Dutch electronics giant Philips, which reported strong earnings and growth at its semiconductor division in the previous session, shed 1.7 per cent to €20.96.