A bear raid on the banks sent Paris steeply lower. Both BNP and Paribas plunged more than 11 per cent and at the close the CAC-40 index was off 139.1 or 4.2 per cent at 3,197.95.
Made groggy in recent sessions by the shake-out for UBS, Switzerland's biggest bank, sentiment in the banking sector took a dive after several brokers turned increasingly negative, among them Morgan Stanley Dean Witter.
Paribas ended 39.50 French francs lower at Ffr302 and BNP lost Ffr40 at Ffr300. Societe Generale came off Ffr65 or 9.5 per cent at Ffr620. CCF, widely seen as relatively immune to Asia and US hedge fund scares, gained Ffr18 at Ffr360.
Zurich tumbled 4.3 per cent, hit by another battering for the financial sector in general and UBS in particular. The SMI index lost 259.4 to 5,760.4 led down by UBS, which crashed 45 Swiss francs or 14.3 per cent to Sfr270 as rumours hit the share late in the day.
Frankfurt fell 3.7 per cent, sliding 169.42 to 4,430.91 on the Xetra DAX as banks and motors ran into heavy selling.
The bearish trend among the banks was given added impetus by earnings downgrades for the sector by BHF Bank. Deutsche Bank shed 6.41 deutschmarks to DM85, Commerzbank lost DM1.85 to DM45.15 and Dresdner retreated DM6.15 or 10 per cent to DM60.
Amsterdam ended 23.74 lower at 934.15 on the AEX index following a another heavy round of selling for financial stocks, notably ING which fell 8.1 per cent.
Milan was caught up in the turmoil surrounding European banks, and the Mibtel index lost 529 or 2.7 per cent to 18,759.
Credito Italiano, which was downgraded by Morgan Stanley, lost 454 lire or 6 per cent to L6,887.
