Early weakness for US bonds hit Frankfurt, exacerbating a downward trend caused by adjustments for dividend payments.
The dollar pushed up to a best-ever level against the euro and Germany's purchasing managers' index for February rose. But US bonds were looking distinctly sour towards the close of trading in Europe and shares tumbled.
By the close of a session characterised by below average volumes, the Xetra DAX index was off 124.89 or 2.6 per cent at 4,779.07 having back from a low of 4,739.65 in the final hour.
Thyssen shed €17.7 to €166.35 after going ex- dividend to the tune of €8.18 with sentiment partly depressed by last Friday's news of dull fourmonth sales and soft incoming orders.
HypoVereinsbank gave up €3.30 at €48.50 and Volkswagen shed €3.14 at €55.36. Firmer features included Deutsche Telekom which added 65 cents at €42.
Paris enjoyed a brief spell in positive territory after investors thought its 1.4 per cent correction on Friday was exaggerated. But continued weakness on Wall Street and rising US bond yields proved them wrong, sending the CAC-40 60.89 or 1.5 per cent lower to 4,032.05.
Renault was €2.50 or 5.9 per cent off to €40 ahead of 1998 results, published after the market closed. Figures showed profits up 63 per cent but traders said worries about the sector at large drove the stock lower.
High-tech issues got a fresh battering, dragged down by weakness in their US peers. Cap Gemini lost €4.80 to €152.70 while STMicroelectronics shed €3.90 to €77.25.
Insurer Axa dropped €4 to €114.80 after Suez-Lyonnaise des Eaux set a €787 million bond exchangeable for Axa shares.
1998 results ahead of expectations did little to prop up BNP, which jumped more than 2 per cent in early trading before paring its gains and ending €1.80 lower at €70.90.
Among the few to buck the declining trend, Canal Plus added €6.90 to €291.50 on continuing alliance talks with Britain's BSkyB.
Amsterdam fell 8.81 to 527.31 on the AEX index with steep falls in fairly modest volumes for ABN-Amro and Akzo Nobel providing most of the downside drive.
ABN shed 50 cents or 2.7 per cent at €18.05 in volume of 5.1 milliom shares, among financials ING shed €1.35 at €49.65. Akzo lost €1.15 or 3.3 per cent at €33.40.
