Shares in Switzerland's UBS continued their tumble after Thursday's news of third-quarter losses of up to 1 billion Swiss francs because of big deficits on its equity and emerging markets business and a Sfr950 million write off on its exposure to LongTerm Capital Management, the troubled hedge fund manager.
The gloom enveloped other markets across Europe where financial stocks spent the day in headlong retreat.
UBS fell Sfr20 or 5.4 per cent to Sfr345 for a two-day loss of 16.7 per cent.
Germany's Dresdner Bank added fuel to the fire with news that it needed to write off a loss of 240 million deutschmarks as a result of its investment in LTCM. The shares lost DM3.31 to DM65.69 even as the bank insisted that the exposure was not damaging.
Frankfurt closed weaker but recouped much of its early losses as Wall Street recovered ground and a firmer dollar lent support. The Xetra DAX index closed 26.93 weaker at 4,584.41 as investors kept their cards close to their chests ahead of what is expected to be a photo-finish in tomorrow's national election.
Zurich finished another volatile session weaker but off its lows. The SMI index, which touched a 1998 low of 5,849.5, closed 83.6 down on the day at 6,085.1. Nestle gained Sfr56 to Sfr2,776 as the market heard rumours that the group planned to sell its Schweppes business to Coca-Cola.
Paris rallied strongly in the second half of the session. Having reached a low of 3,240.81, the CAC-40 index managed to close off 2.1 per cent at 3,310.59.
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