Hedge funds are understood to have seized control of trading liquidity in the shares and bonds of nearly three quarters of companies in the ailing global telecoms sector. Traders say the funds, which were party to the collapse of the Marconi share price last week, are also driving the recent frantic trading volumes in KPN, the Dutch telecoms company, Colt Telecom, Energis and Invensys.

On one day alone last week, 161 million shares traded in Invensys, while over the past two weeks more than a third of its issued share capital has changed hands. Invensys shares closed down at 88p, just off last month's low of 73p, but still way down from last year's 267.75p high.