A boardroom bust-up at UBS, which led to the departure of British chief executive Mr Luqman Arnold after just eight months in the post, took the market by surprise.
Shares in UBS, Switzerland's biggest bank, tumbled 4.2 per cent to 82.65 Swiss francs as investors speculated that Mr Arnold's departure could be linked to disagreements on areas such as strategy in investment banking and wealth management.
In a brief statement, UBS said the change reflected a number of differences of opinion but insisted there were no financial, operational or control issues behind it.
European insurers were marked sharply down as a profits warning from French group Axa raised concerns about a sector downturn. The insurance sector led to losses in the FTSE Eurotop 300 indexes, swiftly followed by the life assurance sub-index. Axa tumbled 6.9 per cent to €22.20 in a volume of 27.5 million shares.
Among other European insurers, Germany's Allianz fell 1.4 per cent to €257.55, while the Dutch-based Aegon lost 2.8 per cent to €29.03 and ING dropped 1.5 per cent to €27.49.
Top utility Suez was one of the worst performers in the CAC 40, the Paris benchmark, following a reduced earnings forecast. Suez fell 2.9 per cent to 32.67. Rivals Eon and RWE came off 1.9 per cent at €54.96 and 1.5 per cent at €40.56 respectively.
EDP, the leading Portuguese utility, lost 1.2 per cent at €2.45 after UBS Warburg turned increasingly bearish.
Finland's UPM Kymmene and Stora rose 2.4 per cent to €37.90 and 1.1 per cent to €13.75 respectively.
Renault, largely left out of Monday's rally for top motor stocks, jumped 3.6 per cent to €39.29. Components group Valeo, buoyed in the preceding session by a broker upgrade, added 0.9 per cent to €43 for a two-day advance of 4.7 per cent.
Technology stocks, which started the day on an upward trend, closed mostly lower. Telecom operators held their ground; Telefonica edged up 0.2 per cent to €15.35.
