Disappointing second-quarter figures from Deutsche Bank and a warning that profits would be lower this year if global markets did not recover in the fourth quarter put the stock under renewed pressure.

The shares fell 3.1 per cent to #77.50 after the cautionary note was sounded by chief executive Rolf Breuer at the bank's half-year earnings news conferences.

The impact of the global economic slowdown was underlined by news of a 49 per cent fall in second quarter net profit, even after Deutsche booked #1 billion in profits from surprise sales of equity holdings.

Commerzbank, by contrast, jumped 1.6 per cent to #26.57 as Mr Breuer said he did not rule out a takeover of Commerzbank or other banks in whole or in part. He said Allianz's takeover of Dresdner Bank had created a new German banking landscape, triggering the resumption of talks with possible partners.

Societe Generale was another winner as Schroder Salomon Smith Barney raised its recommendation on the stock with a target price of #76 ahead of the bank's first half results, due today.

The shares closed 0.9 per cent higher at #64.20.

Bipop Caire reversed early gains of 4 per cent to close lower as a group of investors denied they were interested in buying a significant stake. The shares finished with a 6.6 loss of per cent at #3.41 after Hopa, the Northern Italian investment group that recently sold control of Olivetti to Pirelli, denied it had an interest in Bipop.

Bipop's shares rallied 6 per cent on Tuesday on speculation that a protracted slump in the shares had made it an attractive takeover target.

Franco-Italian chipmaker StMicroelectronics led a rally in the European sector as Merrill Lynch raised its recommendation on the stock, along with 11 others as part of a sector review.