Another nervous session for bonds and the euro sent most European bourses lower for a third day.

All three leading indices dipped 0.2 per cent. The FTSE Eurobloc 100 index ended at 1,129.88 and the FTSE Eurotop 100 at 3,119.15. The broader FTSE Eurotop 300 was 1,355.40 at the close.

Frankfurt managed to stay positive, reversing early losses and closing with the Xetra DAX index 18.60 better at 5,607.10. The low for the session was 5,549.14. Bank shares pushed ahead strongly following sector upgrades from Goldman Sachs and Deutsche Bank. The US broker raised its 2000 target prices for Deutsche Bank and Dresdner. Deutsche Bank moved from neutral to buy on the sector. It rose €2.91 to €64.16 and Dresdner €2.51 to €43.01.

Paris closed lower despite a strong market debut by Credit Lyon- nais, the formerly state-owned bank. The CAC-40 index ended 31.07 or 0.7 per cent down at 4,631.13.

Credit Lyonnais climbed 21 per cent above its reference price, but later retreated to end at €29.01, up €3.51 or 13.8 per cent. The stock benefited from the complex takeover battle between Banque Nationale de Paris, Societe Generale and Paribas. Amsterdam edged lower for the third day running with the AEX index slipping 0.22 to 578.79.

Market heavyweight Royal Dutch was a top performer among benchmark constituents, gaining €1.20 to €62 on oil price optimism.

Milan turned its attention back to the telecoms stocks whose gains offset a decline in Eni and left the Mibtel index just five higher at 25,367.

Telecom Italia picked up 3.3 per cent to €11, after hitting an all-time high of €11.05 shortly before the close. Olivetti gained 1.7 per cent to €2.54 and Tecnost put on 3 per cent to €2.75. Analysts said domestic and foreign funds that had sold stock during Olivetti's takeover of Telecom Italia were ploughing back.