Also weighing on shares, Microsoft Corp, the world's biggest software company, cut fiscal 2003 sales and earnings forecasts.
The technology group was the biggest decliner in the Stoxx 600, shedding 6.3 percent as 35 of its 36 members fell.
Epcos AG slumped 16 percent to 22.30 euros. The German electronics-components maker posted a quarterly loss and said it doesn't expect its business to improve this fiscal year.
"We still have a long way to go" before faith in an earnings rebound is restored, said Michael Lengweiler, who manages 500 million euros in European shares at Bank Sarasin & Cie. He's avoiding insurance stocks.
"I'm not that confident about a market recovery."
Royal Dutch Petroleum Co. lost 2.1 percent to 45.50 euros, and Unilever NV fell 2.5 percent to 55.85 euros. After US exchanges close, the owner of 60 percent of Royal Dutch/Shell Group and the world's biggest food and soap maker will be dropped from the Standard & Poor's 500 Index.
Royal Dutch has lost 21 percent, the fifth-biggest loss in the Stoxx 50, since S&P said the company would leave the S&P 500.
Unilever shares have declined 17 percent. Royal Dutch has been a member of the S&P 500 since 1957, and Unilever has been in the index since 1961.
Novartis AG fell 6.1 percent to 50.5 Swiss francs. Indian drugmaker Dr. Reddy's Laboratories Ltd. challenged a US patent held by Europe's third-largest pharmaceutical company for the antifungal medicine Lamisil, Novartis' fourth-best-selling drug.
Vivendi Universal SA dropped 4.1 percent to 17.45 euros.
The world's second-largest media company may postpone reporting its first-half earnings next week after changes in its top management, a spokesman said. The company was expected to report July 26 and hasn't set a new date.
Edinburgh Fund Managers Group Plc fell 18 percent to 207.5 pence.
The Scottish asset manager was fired by the board of its flagship trust because of lagging investment performance.
Fitzhardinge Plc dropped 13 percent to 102.5 pence. The UK property-services company said full-year income will lag the previous year, citing "muted" demand from the financial-services and telecommunications industries.
WCM Beteiligungs-und Grundbesitz AG climbed 5.5 percent to 3.48 euros. Investors Karl and Ingrid Ehlerding said they raised their stake in the German investment company in recent months, rejecting press reports they are selling shares.
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