A shakeout for the banks and big falls for oil stocks sent Paris lower in the final hour of trading. The CAC-40 index ended off 41.61 at 3,762.13 after touching a session best of 3,822.91.

Societe Generale fell Ffr40 to Ffr954 as nervousness built ahead of six-month results. BNP shed Ffr23 to Ffr370 and CCF tumbled Ffr33.30 to Ffr412.

For most of the day the market had managed to keep its head above water, thanks to upbeat results, notably from the motor sector. But the bears eventually won out. J.P. Morgan cast a cloud over oil shares by cutting its forecasts and reducing earnings estimates. Elf Aquitaine came off Ffr31 at Ffr658 and Total lost Ffr19 at Ffr616.

Frankfurt saw selling pressure accelerate late in the session after Wall Street opened weaker, and by the close of electronic trade the Xetra DAX index was 137.18 lower at 4,958.44.

Dresdner Bank lost four deutschmarks to DM72.50 after its chief executive, Mr Bernhard Walter said the group was not considering any link-up with insurer Allianz that would go beyond co-operation. The remainder of the sector was spooked by reports, subsequently denied, that Japan's Fuji Bank had suffered massive derivatives losses.

Amsterdam moved lower, hit by weak financials and a steep slide at Hoogovens on worries about Asian steel imports. The AEX index came off 19.09 at 1,076.59 in good turnover.

Financials stumbled badly as Russian worries and Japanese derivatives scares hit sentiment.

Zurich was dragged down by selling in Credit Suisse Group as the gloss of good six-month figures was removed by news that Credit Suisse First Boston, its investment banking arm, had net exposure to Brazil and Russia totalling $3.9 billion (£2.7 billion).