Frankfurt DAX: 3,233.75 (-42.41)

The Frankfurt market was extremely weak, closing down by more than 1 per cent.

Sentiment was very negative. This followed the Bundesbank's attempt again to talk down the value of the dollar.

The US currency, it stressed, had risen high enough and it expressed concern at rising unemployment.

Paris CAC-40: 2,594.76 (-22.76)

French shares trimmed their losses after lower than expected US inflation data but were still in the red as the dollar weakness weighed on the market.

US January CPI rose by 0.1 per cent, the smallest monthly increase since the summer, after rising 0.3 per cent in December.

At the end of the day, the market fell by nearly 1 per cent.

Milan Mibtel: 12,160 (-78)

Italian shares opened mostly lower with investors taking fright after left wing leader Mr Fausto Bertinotti said he was strongly opposed to a supplementary budget.

"At the moment the state of the market comes down to politics," is how one dealer summed it up.