PARIS, Feb 7: European stocks fell to their lowest close in two weeks on Thursday as a rate cut by the Bank of England and a more dovish tone from the European Central Bank failed to soothe worries about a global economic downturn.

Tech shares were among the worst hammered, led by Infineon.

The German chipmaker tumbled 14 percent after posting weak quarterly results and saying its Com phone chips unit would remain unprofitable over the full fiscal year.

The sector also retreated after US networking equipment maker Cisco Systems Inc warned of slowing orders, fuelling concerns about a downturn in business spending.

GlaxoSmithKline Plc, Europe’s biggest drug-maker, sank 7.6 per cent after it warned 2008 earnings would fall due to sliding sales of diabetes drug Avandia and more generic competition.

The FTSEurofirst 300 index of top European shares closed 1.9 percent lower at 1,296.40 points. Europe’s benchmark index has lost 14 percent so far in 2008, dragged lower by fears of a US recession.

On the data front, a US report showed that new applications for US unemployment benefits fell by 22,000 last week, but the number of workers remaining on jobless aid rose to its highest level in more than two years. US retailers including Wal-Mart Stores also added to the gloom by reporting results that suggested the economy was sliding.

The DJ Stoxx bank index is down 35 percent from its 52-week high reached last April and is the worst performing European sector.

Around Europe, Germany’s DAX index lost 1.7 percent, UK’s FTSE 100 index dropped 2.6 percent and France’s CAC 40 shed 1.9 percent.

Since the start of the year, the DAX has lost nearly 17 percent, the FTSE is down 11 percent and the CAC is down 16 percent.

France Telecom gained 3.6 percent, boosted by a media report saying the French government was not preparing to sell a stake in the company, and denying speculation such a sale was imminent.

Rolls-Royce Group fell 10 percent on disappointment in the market that the British engine maker only raised its dividend by a third.

BT Group dropped 9.8 percent after the company said lower revenue at its wholesale division hit overall turnover for the third quarter.—Reuters