The Paris market had another day of doubt about its technology-related stocks. The higher-than-expected cost of third-generation mobile phone licences hit home, dragging the CAC-40 index down 91.27 or 1.4 per cent to close at 6,498.50.

Old economy stocks made modest gains. Renault closed up 2.7 per cent at €48.70, Peugeot 0.9 per cent at €226.20 and BNP Paribas 1 per cent at €100.30.

The biggest gainer was Aerospatiale-Matra ahead of the flotation of EADS, the European aerospace group into which it is merging with its German and Spanish peers. Aerospatiale rose 8.6 per cent to €23.42.

Frankfurt continued to drift lower in thin trading volumes, with the banking sector and market heavyweight Deutsche Telekom leading the way down.

Before today's interest rate decision by the European Central Bank, banks met with steady selling. Deutsche Bank shed 30 cents at €86.20 and HypoVereinsbank 79 cents at €70.90.

Deutsche Telekom fell €3.59 or 5 per cent to €67.85 in 5.1 million shares traded as worries about the impending sale of state-owned shares unsettled sentiment.

Allianz also suffered stock overhang anxieties as Deutsche Bank sold part of its 7 per cent stake in the insurance giant. The shares lost €4.30 at €370.50 for a two-day decline of 4.7 per cent.

The Xetra DAX index was off 64.16 at 7,295.64 at 5.30 p.m. German time.

Amsterdam ended little changed with the AEX index off 2.14 at 666.56, but the dull broad market performance masked a number of dramatic share price swings.

KLM drove up a high of €33 on confirmation of co-operation talks with British Airways. The stock closed €2.35 ahead at €30.10 for a 15 per cent gain in three sessions.

Brewer Heineken jumped 4.1 per cent or €2.30 to €58.05 on talk that it had been outbid in the international auction to acquire the brewing operations of Bass of Britain.

Zurich shrugged off Tuesday's weakness as Roche recovered from its fall to a near 10-month low. The SMI index finished 51.3 better at 7,797.9.

Milan was lifted by sharp gains in Eni and Telecom Italia, and the Mibtel index finished 388 higher at 31,958.