European shares ended little changed yesterday as selloffs in German lenders Deutsche Bank and Commerzbank, hit by concerns about their balance sheets, were offset by a bounce in Spanish peers Santander and BBVA.

Shares in Deutsche Bank fell 2.6 per cent as the bank, which has embarked on a deleveraging plan to shed €250 billion in assets, warned of lower investment banking revenue this quarter.

The bank blamed the fall in revenue on expectations the US Federal Reserve would begin to cut its bond purchases sapping activity in the fixed income market.

“Most of the deleveraging is coming out of the fixed income business,” said Piers Brown, an analyst at Macquarie Securities.

“People feel there’s a bit more pressure on Deutsche going forward from the deleveraging plan.”

Volume on Deutsche Bank’s shares was 73 per cent higher than its average over the past three months.

Smaller competitor Commerzbank, which is trying to reduce its €347 billion book of non-core assets, fell six per cent in volume twice the average after telling analysts no major divestment was on the cards until the year-end.

They were among the top fallers on the FTSEurofirst 300 index of top European shares, which ended 0.1 per cent lower at 1,256.93 points.

The eurozone’s blue-chip Euro STOXX 50 index edged 0.2 per cent higher to 2,927.35 points.

The indexes recovered ground in late trade, led by Spanish bank Santander, which rose 1.4 per cent after saying it aims for an extra €1 billion in cost savings by 2016.

Peer BBVA rose 1.3 per cent, helping Spain’s Ibex index climb 0.8 per cent, the best performer among major national indexes in Europe.

The FTSEurofirst 300 has slipped about 1.4 per cent since hitting a five-year high last week but it was still on track for a 5.1 per cent monthly gain, its best showing since October 2011.

The market has been fretting about next month’s negotiations in Washington to raise the federal debt ceiling to prevent a default, as well as the outlook for the Federal Reserve’s stimulus measures after the Fed decided not to scale back the measures last week.

“Investors are still confused about the Fed’s monetary policy, and now the focus is switching to negotiations between the Democrats and Republicans in Washington.

“After such a rally, people are now very cautious,” said Guillaume Dumans, the co-head of research firm 2Bremans.