Europe's leading shares swung either side of breakeven yesterday as investors braced for today's expected surge in stock-related derivatives trading, but were mostly lower in late trade.
Insurance stocks such as Germany's Munich Re led the fallers after negative broker comment, but strong gains in Telefonica and Vodafone helped Madrid and London outperform the rest of the region.
"All this erratic trading has to do with tomorrow's flood of futures and options expiries," said a Frankfurt analyst, as the German Dax volatility index spiked to a one-month high.
By 1639 GMT, with only Frankfurt still trading officially, the FTSE Eurotop 300 was down 0.3 per cent, having risen sharply in early trade, then fallen by nearly two per cent, rallied to breakeven, and yo-yoed in the red for most of the afternoon.
The narrower DJ Euro Stoxx 50 was down 0.65 per cent at 2,411 points.
Today sees the simultaneous expiry of stock index futures and options and individual stock options - "triple-witching" - in the United States. The event is typically associated with heightened volatility, and is preceded by a flood of similar futures and option expiries across Europe.
The insurance sector was the worst performer, dragged to its lowest level in over a month after Goldman Sachs downgraded Europe's largest insurer Allianz AG and reinsurer Munich Re to "underperform" from "in-line".
The downgrade on Allianz came on top of an earnings-estimates downgrade from Merrill Lynch and followed the shock resignation on Wednesday of its chief executive, Henning Schulte-Noelle.
Dutch ING fell 5.3 per cent, while Munich Re shed 4.4 per cent. Allianz fell 2.3 per cent and Axa shed 3.3 per cent.
Royal & Sun Alliance lost five per cent as the market proved unimpressed by its choice of former AXA executive Andy Haste as new chief executive.
Chemicals also fell, as German firms Bayer and BASF shed 3.3 per cent and 1.5 per cent, while telecoms were boosted by gains in index heavyweights Vodafone, Deutsche Telekom and Telefonica.
German power firm E.ON was among Europe's top blue-chip performers, up 1.5 per cent, having fallen by 10 per cent in the previous two days after a court dealt a new blow to its plan to buy gas importer Ruhrgas.
A positive earnings announcement from US software titan Oracle failed to support European technology stocks.