European share indexes fell today, led by banks and cyclical stocks, as concern grew that the US Federal Reserve's rate cut may not be enough to prevent further damage to the world's largest economy.
By 11am the FTSEurofirst 300 index of top European shares was down 0.9 per cent at 1,526.41 points.
The depth of the sell-off was not as profound by midday as declining shares outnumbered advancers by about 5 to 1, compared with 35 to 1 in early trade.
Reflecting a retrenchment in investor risk appetite, banks drove the decline in the broader market, followed by autos and miners, while the few sectors to register a rise included defensives such as food producer Nestle and utilities E.ON and RWE.
"The clear message is the Fed is a lot more sanguine than the markets are at the moment," said Andrew Lynch, a portfolio manager at Schroders.
"It's obviously difficult to determine who is actually right but there is certainly a case to be made that maybe things are not as bad as the markets have worked themselves up to."
The Fed cut its benchmark funds rate by an expected quarter-point to 4.25 per cent, but did not deliver the steep cut to the discount rate - the rate at which banks borrow from the Fed - that many had hoped would bring relief to tight conditions in the credit markets.
Banks bore the brunt of investor dissatisfaction with the Fed's action. Royal Bank of Scotland was the top weighted loser, falling 4.1 per cent, while UBS shed 3.4 per cent and Barclays fell 3.8 per cent.
US stock futures suggested a recovery on Wall Street later after the three benchmark indexes fell by more than 2 per cent yesterday.
Other stocks in the red included German auto manufacturer Daimler, which fell by nearly 3 per cent, ranking it among the top five weighted losers.
Rio Tinto fell 2.6 per cent after the company said it saw nothing new in comments from BHP Billiton, which said it was considering its next move in its attempt to take over its smaller rival.
BHP shares fell 2.8 per cent.
A 1.5 per cent fall in the price of copper after the Fed flagged its concern about US economic growth weighed on the mining sector, with Antofagasta down 4.3 per cent, Anglo American down 1.5 per cent and Kazakhmys down 3.3 per cent.