Markets slump on rate news

DAX: 4243.01 (-104.23)

DAX: 4243.01 (-104.23)

German shares dived deeper into negative territory, tumbling more than 2 per cent as the market was hit by the rate rise. The Bundesbank cited rising inflation as justification.

The 30-share DAX index, already hit by Wednesday's fall of more than 80 points in Wall Street ended floor sales 2.4 per cent lower as investors reacted to the rate rise announcement.

CAC-40: 2960.65 (-63.43)

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French equities ended sharply lower, stunned by what looked like co-ordinated interest rate rises by the Bundesbank and the Bank of France, share analysts said.

The financial tremors were heightened by a political shock with news that Mr Romano Prodi was resigning as Italy's prime minister, complicating the outlook for EMU. Mibtel: 15,075 (-442)

Italian shares pared earlier losses as markets held onto hopes that Italy's political crisis would be resolved without calling early elections.

The all-share Mibtel Index closed 2.8 per cent lower at 15,075, after falling as low as 14,901.