Frankfurt DAX: 5476.25 (-104.97)

Shares closed with a 2 per cent retreat in Frankfurt, ending below the 5,500 point level. Dealers said this week looks rocky, given the weakness of the Dow.

The two main stocks bucking the trend were Lufthansa, up 1.7 per cent, and Karstadt, which was up 2 per cent on positive summer sale news.

Paris CAC-40: 3939.45 (+2.43)

Paris stocks closed down over 2.5 per cent as a jittery market was hampered by thin volumes and another drop on Wall Street.

Profit-taking combined with sparse trade tipped the index into the red from the open. Although many brokers stuck to a long-term view the market was underpinned by good European economic fundamentals, investors were unnerved by Wall Street's slippage.

Milan Mibtel: 23,446 (-279)

The Milan bourse sunk in late trading to end over 1.5 per cent down as Wall Street traded lower with investors put off by Asian losses and yen weakness. Traders said the losses were not helped by the thin holiday trade.