Shares in Madrid followed Wall Street lower, shedding earlier gains made after the Bank of Spain took the market by surprise with a 25 basis point cut in its money market repo rate. The general index, higher in each of the three previous sessions, closed down 4.94 to 784.55.
Stockholm failed to capitalise on the central bank's 25 basis point rate cut, and the general index fell 36.07 or 1.2 per cent to 2,998.28. Portugal edged lower in spite of a rate cut by the Bank of Portugal, with the BVL 30 index closing down 7.06 to 4,790.25.
Frankfurt paused after three days of gains and the Xetra DAX index turned lower, closing down 53.15 at 4,709.32.
Banks remained under pressure as Goldman Sachs downgraded its 1998 earnings estimates on Dresdner Bank, Deutsche Bank and HypoVereinsbank. HypoVereinsbank lost 4.55 deutschmarks to DM122.50 and Deutsche Bank fell DM2.10 to DM102. Dresdner Bank, weak on Monday after its nine-month figures failed to live up to some expectations, was flat at DM66. Paris derived support from the day's interest rate cuts and the CAC-40 index finished 14.04 higher at 3,583.64, off a high of 3,616.86.
Profit-taking in Alcatel sent the stock eight francs lower to Ffr603. France Telecom lost Ffr7 to Ffr379, unnerved by Deutsche Telekom on pricing pressure.
Zurich ran into profit-taking that sent the SMI index down 45.9 to 4,596.5.
Milan fell back on profit-taking in thin trading, and the Mibtel index edged down 54 or 0.3 per cent to 20,204.
Telecom Italia fell 155 lire to L11,950 on disappointment over the board's failure to appoint a managing director on Monday. Fiat rose L17 to L4,780 on persistent speculation over an international alliance.
