Frankfurt saw a steep slide for bank shares with sector leader Deutsche Bank off more than 9 per cent. As a result, the Xetra DAX index ended the electronic session with a decline of 111.62 to 4,611.34, a full 253 points short of the day's high.
The sellers moved heavily against the banks in early afternoon on the news that UBS of Switzerland planned a post-market press conference, to announce its exposure following the bail-out of a US hedge fund.
Deutsche Bank fell 9.80 deutschmarks to DM93.80 and Dresdner Bank DM6 to DM69. Commerzbank gave up DM1.72 at DM49.58. Computer leader SAP, buoyed by recent broker upgrades, ran into profit-taking, losing DM77.30 to DM851.70.
Paris ended within a whisker of its session low with the CAC-40 index down 37.30 at 3,386.48. The benchmark reached 3,544.59 in early trading, but heavy selling of banks and oils turned sentiment on its head.
The banks fell steeply on worries about contributions to the $3.5 billion needed to rescue Long-Term Capital Management, the crippled US hedge fund. Paribas and Societe Generale, which announced they would be taking part in the rescue, fell 20.20 francs to Ffr364 and Ffr26 to Ffr744 respectively. BNP gave up Ffr12.40 at Ffr346.50.
Oils succumbed to profit-taking. A strong market lately on oil price gains, Total lost Ffr50 or 6.7 per cent at Ffr700 and Elf-Aquitaine Ffr42 at Ffr719.
Amsterdam closed off 1.13 at 969.37 on the AEX index after results enthusiasm at French steel rival Usinor, sent Hoogovens up 3 guilders to Fl 61.90. Lehman Brothers lifted Unilever from "outperformer" to "buy", pushing the shares up Fl 6.20 or 5.1 per cent to Fl 127.40.
Share buy-back plans and news of strong progress within its life sciences division, lifted chemicals leader DSM Fl 3.20 to Fl 163.50.
Milan fell victim to political uncertainty over the government's budget, and the Mibtel index lost 206 or 1 per cent to 18,987. Banca di Roma, the most active issue of the day, fell 71 lire to L2,830 after rumours of a merger with BCI drove the shares higher in the morning. BCI fell L288 to L8,598.
RAS, the insurer, rose L287 to L18,686 after announcing a 67 per cent rise in first-half net profits to L276 billion. Investors were encouraged by comments from the company that full-year results would also improve.
Madrid lost its early gains as Latin America-related shares fell back on profit taking, and the general index closed down 9.11 or 1.3 per cent to 702. Stocks with Latin American business ties, which had rebounded earlier in the week, fell prey to profit taking.
