By Ishaq Siddiqi
Banking stocks fell and weak U.S. economic data soured sentiment, undoing a firmer start to European share indexes.
The dollar fell sharply as a surprise decision by the Monetary Authority of Singapore to tighten policy helped accelerate the currency's weakness. Gold and oil prices rose.
Banking stocks fell as growing concerns about foreclosure practices rattled U.S. investors. In addition, analysts anticipate that European banks will need to raise substantial capital to meet tougher regulations commonly referred to as "Basel III."
Overall, the Stoxx Europe 600 index ended 0.2% lower at 265.68. The U.K.'s FTSE 100 shed 0.4% to 5727.21. France's CAC-40 eased 0.2% to 3819.17. Germany's DAX bucked the trend, adding 0.3% to 6455.27. On Wall Street, the Dow Jones Industrial Average was off 0.2% at 11,070.84 after a series of weak economic reports, including a surprising rise in weekly jobless claims.
Royal Bank of Scotland declined 4.7%, and (NYS:BCS) Barclays (NYS:BCS) lost 4.1%, both in London. Société Générale (PAR:FR:GLE) fell 3.1% and Crédit Agricole shed 1.7%, both in Paris.
Resource plays generally rose on the back of a surge in crude oil and bullion prices. Xstrata climbed 3.2% and Fresnillo (LON:UK:FRES) gained 2.3%. Shares of Rio Tinto (NYS:RIO) rose 2.4% after the firm reported a strong performance in the third quarter with higher iron-ore production.
But African Barrick Gold PLC tumbled 9.5% even as gold soared on news the company cut its 2010 output target after it discovered fuel theft at its Buzwagi mine.
In the currency market, the euro was trading at $1.4065 as European stock markets closed, up from $1.3962 late in New York. The dollar weakened to 81.42 yen, down from 81.81 yen, after hitting a fresh 15-year low earlier in the session.
Gold futures resumed their run higher. Late in London, gold for December delivery advanced $2.80, or 0.2%, to $1,373.30 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, it reached an intraday high of $1,388.10 an ounce.
Light, sweet, crude for November delivery was up 14 cents at $83.15 a barrel on the New York Mercantile Exchange.
Friday, data on euro-zone harmonized inflation and the region's trade balance are due while the U.S. will see reports on retail sales, consumer prices, Empire State manufacturing and University of Michigan confidence.
In major market action: Saint-Gobain (PAR:FR:SGO) rose 1.2% in Paris. The company is considering an initial public offering of its packaging operations, one of the world's biggest manufacturers of glass containers.
Syngenta rose 3.8% in Zurich after the producer of seeds and crop-protection chemicals said third-quarter sales increased 10% and affirmed its full-year outlook.
Roche Holding (SWX:CH:ROG) shed 0.5%. The Swiss drug firm reported a 7% decline in third-quarter sales, as demand for its Tamiflu treatment dropped sharply.
Barbara Kollmeyer contributed to this article.