European stocks were rooted in negative territory today as Wall Street made a volatile start and a murky global security outlook cast a pall over world markets.
A decision by the Bank of England to trim its key interest rate by a quarter percentage point, which followed cuts from central bankers in the United States, the euro zone and elsewhere, provided some support.
But it was not enough to stop European markets sliding into the red.
In London, the FTSE 100 index of leading shares shed two per cent to 4,800.7 points.
The Frankfurt DAX 30 index gave up 1.2 per cent to 4,183.13 points, while the Paris CAC 40 lost 2.2 per cent to 3,928.58 points.
The euro-zone Euro Stoxx 50 index dropped two percent to 3,141.83 points.
The euro was changing hands for 0.9212 dollars.
The price of oil eased here to 28.23 dollars a barrel, while the price of an ounce of gold dropped to 288.65 dollars.
European investors were glued to their screens as Wall Street opened for the second day of trading since hijacked airlines ploughed into the World Trade Center and the Pentagon last Tuesday.
But US stocks struggled to find a clear direction, leaving European investors in cautious mood.
Worries about the uncertain global outlook in the wake of last Tuesday's atrocities against US targets grew after the Afghanistan's ruling Taliban told its people to be ready for a holy war.
Islamic scholars gathering to decide prime suspect Osama bin Laden's fate made it clear they would not hand over the man wanted "dead or alive," and market strategists warn that a US strike in Afghanistan against bin Laden could destabilise world markets even more. Pressure on stocks in European airlines and aviation engineers meanwhile showed little sign of abating.
Shares in Rolls-Royce lost 3.8 percent to 139.5 pence while European aviation and defence giant EADS gave up 10 percent to 11.0 euros in Paris.
Swissair plunged another 12.8 percent to 42.5 Swiss francs, German carrier Lufthansa eased 5.6 percent to 10.67 euros and British Airways weakened 2.3 percent to 172 pence.
Among other losers, British-based banking giant HSBC dropped 4.2 percent to 658 pence and GlaxoSmithKline dipped three per cent to 1,765 pence.
French car maker Renault slumped 8.1 percent to 31.7 euros while German rival Volkswagon lost 6.7 percent to 37.85 euros.
Earlier, Asian markets had rallied, relieved that Wall Street had avoided outright meltdown when it had reopened on Monday.
Tokyo share prices rebounded 1.8 per cent on Tuesday, though gains were pared by bomb threats in late trading. Hong Kong share prices eased 0.1 per cent.
AFP