A combination of political uncertainty and interest rate wobbles sent Frankfurt steeply lower. The Xetra Dax index ended a thin session off 129.32 at 4,668.52.
RWE fell steeply as worries about the group's role at the centre of an escalating row between the government and corporate Germany over tax reform undermined sentiment. The shares slipped €2.16 at €36.99.
BMW shed €24 at €599.99 and DaimlerChysler, hit by a further wave of safety scares this time involving its small Smart car, lost €3.79 at €79.86. Cyclicals lost ground with Linde down €14 at €482 and Henkel €2.30 at €72.70. Siemens gave up €2.14 at €53.36.
Paris ended another sluggish day 1.1 per cent worse off, following the rest of Europe and a feeble Wall Street. The CAC-40 retreated 44.47 to 4,004.16. Alcatel led the gainers, moving €7.60 or 7.5 per cent ahead to €109.10, as investors continued to cheer its planned acquisition of Xylan of the US.
Peugeot slid €2.80 to €116.30 after posting positive but lower-than-expected 1998 profits that compared poorly with Renault's 63 per cent rise announced on Monday. Bank issues delivered a strong performance amid renewed merger talk in the sector. CCF outperformed its peers, adding €2.60 to €81.15, while Societe Generale put on 60 cents to €136.10. BNP moved €1.35 ahead to €75.85 after Goldman Sachs increased its 1999 earnings per share forecast after strong 1998 results on Monday.
Amsterdam moved lower for a third day, slipping a further €6.93 to €519.16 on the AEX index after a number of heavyweight results did little to bolster sentiment.
Insurer Aegon eased 95 cents to €93.55 following results in line with broker forecasts. Brewer Heineken crashed €2.55 or 5.4 per cent to €44.85 after warning about slowing earnings growth this year.
Among financials, ABN-Amro came off 30 cents at €17.75 after the group declined to comment on an Italian report that it was set to take a stake in Banca di Roma.
Milan ran out of steam, closing at its low for the day as investors kept a wary eye on developments in Frankfurt. The real-time Mibtel index turned back from a high of 23,812 to finish 356 lower at 23,390.
Helsinki parted company with the bigger European markets, ending 1.1 per cent higher, boosted by a bullish technology sector and healthy cyclical stocks. The Hex index was 64.05 ahead to 6,119.33 as investors banked on an economic rebound.
