Fresh worries about banks hit European stocks

European shares fell yesterday, dented by fresh concern about the impact of the credit crunch on bank profitability after a warning from Deutsche Bank and another slide in Northern Rock shares.

Banks were the biggest drag on the index, while the euro's rise to new record highs against the dollar dented shares in major exporters.

Deutsche fell two per cent, putting it among the biggest negative weights on the index after chief executive officer Josef Ackermann said late on Wednesday the liquidity crisis would take its toll on third-quarter profits at Germany's biggest bank.

The FTSEurofirst 300 index of top European shares ended 0.7 per cent down at 1,539.07 points.