Google today launches a computer toolbar that hooks on to Microsoft's Windows software and which signals an intention to usurp the world's most popular operating platform.

Google's Desktop 2 builds on an existing application that allows users to search the hard-drive of their computers through a Google toolbar on their desktop. The updated version will "piggyback" Windows 2000 or Windows XP and will display stock prices, personalised news headlines and weather reports on the right-hand-side of Windows pages.

The company describes the tool as "a personal web assistant" that "learns the user's habits and interests". It will, for example, automatically bring you news reports from what it works out are your favourite sources.

Analysts said the tool could be the first incarnation of a Google web browser that could eventually rival Microsoft's Internet Explorer. "Let it be known from this moment: Google is serious. It wants to take your desktop away from Microsoft," said Brad Hill, a technology writer at the Unofficial Google Weblog.

Desktop 2's release comes just days after Google said it would revisit the Nasdaq stock exchange in New York to raise up to $4 billion in cash. Analysts have since questioned the logic behind the move for a company that already has $2.9 billion in cash on its books and says it is not planning a major acquisition.

Shares in Google fell sharply in the wake of the announcement on Thursday, losing 7 per cent. Investors were braced for a further slide today when sellers who bought the shares in last year's market debut are able to offload them without paying 40 per cent in capital gains taxes.

The shares traded at $275.69 in morning trade in New York today, down around 1.5 per cent on the day. The stock floated at $85 a year ago.

As it already dominates the internet paid-search advertising market, investors may demand that Google demonstrates it can fasten its hugely popular brand to other services and products to fuel future growth.

The original Google desktop search produst was widely seen as throwing the gauntlet down to Microsoft and the latest version ups the rivalry. The Desktop 2 Sidebar can be used to find and launch applications. It is similar to the Spotlight feature of Apple Computer Mac OS X and the built-in search of Microsoft Windows Vista, which is expected to be released next year.

Google's Desktop 2 also allows users to access Really Simple Syndication (RSS) feeds, which allows web users to cherry-pick content from their favourite sites and have it flowed to their machine automatically.

"For the novice, it’s very easy. They don’t even have to know what RSS feeds are," Nikhil Bhatla, Google Desktop’s product manager, said. "They’ll just start seeing them in the Sidebar. Advanced users can go in and customise to their hearts’ delight."

The Google Sidebar also has its own search box and adds a new toolbar to Microsoft’s Outlook e-mail program, allowing access to messages from several different e-mail accounts at the same time.

Some features, including the "personalised news" function, involve sending details of a user's surfing habits back to Google. Google insists that no personally identifying data is transmitted and that users can opt out of the system. However, it recommends against using the desktop program tool on computers in Internet cafes or in cases where many people share the same operating system account.

Google has already targeted people using Microsoft Windows 2000 and XP, who account for the majority of the desktop market. Other recent products include Google Earth, which also only works with Windows, and a blogging tool that works with Microsoft Word.

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