European shares sank to a near five-year closing low yesterday after highly volatile trade, shrugging off coordinated rate cuts by top central banks as economic growth worries persisted.

The FTSEurofirst 300 index of top European shares, closed unofficially down 6.1 per cent at 941.93 points - the lowest close since December 17, 2003.

The benchmark European index was down nearly eight per cent in early trade, then recouped most of its losses following the rate cuts, only to tumble again late in the day.

The US Federal Reserve led a round of cuts and eased by half a point, as did the European Central Bank.

The Bank of England and central banks in Switzerland, Canada and Sweden also cut rates.

The banking sector took the most points off the index, with UniCredit sliding 12.6 per cent, Deutsche Bank falling 10.7 per cent and Barclays down 2.4 per cent.

Some British bank shares rose after Britain announced a multi-billion pound rescue package for banks that included plans to inject up to £50 billion of government money into the country's biggest operators.

HBOS jumped 24.5 per cent while Royal Bank of Scotland rose 0.8 per cent.

Fears of a steep slowdown in economic growth sharpened, with the International Monetary Fund slashing its 2009 forecast for world growth to 3.0 per cent from a July projection of 3.9 per cent, and warning that a recovery from the worst financial crisis since the 1930s would be unusually slow.