Dutch bank ABN Amro dropped 5.5 per cent to €23.60, as the market registered concern that the Dutch group may issue shares to buy Michigan National Corp from National Australia Bank for $2.75 billion. Analysts noted the move could have a detrimental impact on earnings per share.
The news came on a bad day for the financial sectors, as analysts homed in on worries that US banks were seeing bad debt problems at a much earlier stage in the economic cycle than usual.
The German banks were notably subdued amid concern about investment banking earnings, as weak stock markets hit the flow of IPOs. Deutsche Bank fell 1.4 per cent to €87.75 and Dresdner Bank 1.2 per cent to €47.20.
German insurer Allianz eased 0.2 per cent to €394.20 in spite of a better-than-expected rise in nine-month gross premium income.
French food group Danone recovered much of Wednesday's losses with news it had abandoned takeover talks with Quaker Oats. The shares, down 10.5 per cent in the previous session, rebounded 6.3 per cent to €153.10 as Danone cut short talks after a detailed financial analysis of the Quaker Oats situation.
"Danone considered that the financial terms of this acquisition would not be in the interest of shareholders, nor coherent with the group's strategy for creating value," the company said.
Wednesday's sharp fall reflected concerns about the impact on earnings of a takeover, at a reported cost of about $13 billion. Danone's reported interest in the US company followed news that Coca-Cola had decided against making a bid.
Nestle, the world's largest food and beverages group, slipped 0.2 per cent to SFr3,804 as it declined comment on renewed market rumours that it might be interested in acquiring Quaker Oats. Dutch leader Unilever came off 3.2 per cent at €67.55.
In the pharmaceutical sector, Schering closed 2.5 per cent ahead at €67. The share was making up for some of its under-performance since the group reported weaker-than-expected third-quarter results at the end of October and gave news that a planned biotechnology spin-off would be delayed.
DaimlerChrysler, a woeful under-performer this month, appeared finally to find some sort of a level yesterday, helped by suggestions from the group that a more radical restructuring in the US could be in train. The stock, hit by a second profits warning last Friday, rallied 4.6 per cent to €48.71.
