There was little to inspire funds and institutions in Frankfurt yesterday, so early buying interest faded.

With interest rates across several European countries reduced last week, German dealers had precious little other economic news or data to help trigger buying interest yesterday.

Market specialists now believe there is little prospect of a further interest rate reduction in Germany ahead of January's launch of the single European currency.

Turnover was thin and with several market participants said to have already decided to cease dealing this year, analysts expect volume to decline further over the next two weeks. The Xetra Dax ended the day 1.7 per cent down at 4,721.17.

Among individual stocks, a couple of big trades were reported in BMW. The shares slipped 10 deutswchmarks to DM1,060. More positive sentiment has started returning to the stock following the recent settlement at its UK Rover Group subsidiary.

Paris saw thin trade in the absence of strong corporate news and with some book-squaring.

Dealers suggested many institutions had chosen to devote their attention to the squaring of books and adjusting portfolios ahead of the introduction of the euro.

The tone of the market remained positive for most of the session and the CAC-40 eventually closed 0.87 per cent up at 3,771.22, but with no published economic or trade data to give the bourse a firm lead, most attention focused on the little corporate news there was.

Amsterdam moved higher on steady buying, with the AEX index ending 5.74 higher at 1,073.61.

Madrid edged forward as investors stayed on the sidelines in advance of a holiday today. The general index closed 5.06 or 0.6 per cent higher at 830.03.