London's FT-SE 100 index fell 40.4 points to 5,270.9 points, with falling shares outnumbering rising stocks by 79 to 18, as investors hoping for a Bank of England interest rate cut later in the day looked set to be disappointed.

Although there are signs of economic slowdown and a recent spate of manufacturing job losses, the central bank is widely expected to maintain rates at 7.5 per cent, among the highest in Europe.

Frankfurt's DAX index fell by 39.04 points to 4,919.40, while the Paris CAC-40 Index fell by 1.45 per cent.

The Mib 30 index in Milan fell by 1.93 per cent, Amsterdam's AEX index was down by 2.5 per cent, and the Spanish market fell by 1.90 per cent.

The widespread losses followed a 155.76 point dip on the Dow Jones as well as declines in the Hang Seng and Nikkei indices.

In London, the price of shares in Barclays bank lost40 pence to 1,240 pence a share and HSBC fell by 36 pence to 1,210 pence a share.

BTR fell 11 pence to 120 pence a share after announcing pre-tax losses of 45 million pounds.

Centrica gas rose six pence to 105 pence a share after reporting a return to profits in its interim results.

United Biscuits rose nine pence to 204 pence a share after reporting a 13.5 percent increase in interim profits compared to the same period last year.

Sema, which reported a 24.1 per cent rise in interim profits compared to the same period last year, rose 42 pence to 605 pence a share.

Anglo-Australian mining group Rio Tinto fell 11 pence to 611 pence a share after reporting lower profits due to Asian worries and low commodity prices.

Meanwhile, Japanese share prices reversed early gains and ended 0.6 per cent lower Thursday despite the Bank of Japan's move to lower interest rates, brokers said.

The central bank's decision to guide the overnight interbank rate to 0.25 per cent is not expected to benefit the overalleconomy, brokers said.

``The BoJ move yesterday did not change trading conditions at all,'' a Universal Securities dealer said. The key Nikkei stock average of the Tokyo Stock Exchange lost 89.51 points to finish at 14,666.03.

The broader Topix index of all first-section issues fell 6.10 points to 1,109.91 points, with an estimated 370 million shares changing hands against 417.7 million the previous day. Stocks fell into the negative territory in late trading as some bank shares extended losses, brokers said.