LONDON -- European shares fell back towards five-year lows on Friday morning as weak guidance from France's Saint-Gobain rattled the construction sector, and negative broker comment sent miners skidding.

That helped dash investor hopes for a swift recovery in old economy earnings, although cyclical sectors were not altogether out favor, as autos rose strongly after French car maker Renault boosted its profit margin targets.

At 0859 GMT, the FTSE Eurotop 300 index of Pan-European Blue Chips fell two percent and the narrower DJ Euro Stoxx 50 index lost 2.5 percent.

"Volumes have been increasing and we've seen solid two-way business this week, which is a good sign that we are close to a bottom," said senior trader Lars Wohlers of West LB Panmure in Duesseldorf, having seen the market drop by more than 30 percent so far this year.

Valuations have also become more attractive after Europe's 13 percent drop in the prior four sessions, and some fund managers have begun buying again. "But overall it's going to remain very bumpy today and over next week, as a lot of people are still poised to reduce their positions on any signs of strength."

Strategists at Commerzbank said current market volatility was the fallout of a credit -- not equity -- bubble, following years of debt-financed over investment.

"This is hitting market valuations by imposing a credit investors risk tolerance on the equity market," they said in research note, meaning a preference for companies with low debt levels, cash in the bank, earnings now rather than the promise of earnings in the future, and tangible assets.

--- Builders Burned --- French building materials group Saint Gobain warned that 2002 profits would only roughly match 2001's performance, knocking its shares down more than 20 percent.

That helped push the DJ Stoxx construction sector index to the top of the Sectoral Loserboard, with a loss of five percent.

Sector rivals Pilkington and Lafarge fell between five and eight percent each.

Another cyclical sector in the wars was basic resources, dragged down by Rio Tinto after Morgan Stanley, Merrill Lynch, and CSFB all cut their profit forecasts for the Anglo-Australian mining giant after the Thursday put for a recovery in metal prices.