Eurostoxx 50: 2,847.96 (–71.09) Frankfurt DAX: 7,026.85 (–151.44) Paris CAC: 3,881.24 (–93.24): EUROPEAN STOCKS dropped the most in three weeks yesterday, as Standard and Poor's ratings service revised its credit outlook for the US to negative and speculation escalated that Greece needs to restructure its debt.

Alpha Bank and Société Générale led a sell-off in banks, both dropping more than 3 per cent.

The Stoxx Europe 600 Index retreated 1.6 per cent to 273.4 at the close in London. European stocks extended their losses after the SP revised its long-term sovereign credit rating for the world’s largest economy to negative from stable.

The gauge dropped 1.4 per cent last week as the International Monetary Fund cut its growth forecasts.

“It doesn’t take much to worry these markets, especially as we have a sovereign-debt crisis that is yet to be resolved in Europe,” said Mike Lenhoff, London-based chief strategist at Brewin Dolphin Securities.

Greece’s ASE Index lost 2.6 per cent as s finance minister George Papaconstantinou said the country had no plan for debt restructuring even as German officials openly discussed the possibility and investors charged a record amount to insure the country’s obligations.

Alpha Bank led Greek lenders lower, tumbling 7.5 per cent to €3.83 in Athens trading. Société Générale also lost ground, falling 3.9 per cent to €43.47 in Paris, while Italy’s UniCredit dropped 4.2 per cent to €1.64.

Commerzbank declined 5.1 per cent to €4.19 as the bank’s conditional mandatory exchangeable notes, or Comen, also retreated in Frankfurt trading.

Allianz, Europe’s biggest insurer by market capitalisation, tumbled 4.7 per cent to €98.45. Munich Re, a reinsurer, sank 2.6 per cent to €112.30.

Salzgitter lost 5.1 per cent to €50.78 after Goldman Sachs downgraded Germany’s second-largest steelmaker. ThyssenKrupp slid 3.8 per cent to €28.57.

Nestlé, the maker of KitKat chocolate bars and Nescafé Gold Blend instant coffee, slid 4.2 per cent to 52.20 Swiss francs.

Bwin surged 30 per cent to 170p after the founders of rival internet poker companies were indicted in the US with charges ranging from bank fraud to illegal gambling.

888 Holdings soared 19 per cent to 41.3p. – (Bloomberg)