Heavy selling of cyclical stocks sent Frankfurt down 3.3 per cent on the Xetra Dax index which closed off 248.67 at 7,396.13, its low for the session.
Chemicals leaders BASF and Bayers both fell more than 5 per cent, sliding €2.21 at €40.99 and €2.45 at €41.25 respectively. Daimler-Chrysler, widely rumoured to be teeing up a take-over bid for Peugeot of France, eased 66 cents at €66.29.
Banks were weak as oil price strength heightened the interest-rate uncertainty amid the countdown to today's results statement from sector leader Deutsche Bank. Dresdner Bank lost €1.00 at €51.40 and Deutsche Bank came off €3.60 or 4.3 per cent at €81.
Paris closed with a steep loss as strong US data and surging oil prices set off fears of further interest rate rises to curb inflation. The CAC 40 index lost 175.60 or 2.8 per cent to 6,092.63.
It was a particularly bad day for technology-related stocks. Canal Plus, which has gained more than 90 per cent since the beginning of the year, was hit by profit taking and lost €40.90 to €267.10, a fall of over 13 per cent. A weaker Nasdaq helped push France Telecom down €13.50 to €158.20 and Cap Gemini €15.70 to €240.
Amsterdam ended little changed with steep falls for tech leaders Philips and KPN countered by sharp gains among a number of old economy heavyweights. These included a jump of €2.81 or 5.6 per cent to €52.86 at ING on news of a $550 million Mexican insurance take-over which stands to enhance earnings from day one.
The AEX index ended 2.38 lower at 652.34 in moderate turnover.
Madrid closed lower, pulled down by a wave of selling in tech stocks which ended a run of five record closing highs. The Ibex 35 index lost 293.5 to 12,165.1.
Milan dropped sharply in late trade as a negative Nasdaq prompted investors in telecom stocks to cash in recent gains. The Mibtel all-share index lost 1,274 or 3.9 per cent to 31,562.
Helsinki extended Monday's losses as the Nasdaq opened in a jittery mood. The Hex general index closed at 15,395.11, down 127.54. Sonera recovered only a fraction of its 10 per cent fall on Monday, closing up 90 cents at €73.50, while Nokia was off €3.10 at €192.70.
