Banking shares rose in Europe on Abbey National takeover. The weekend business pages had made much of the possibilities in store for Santander and its proposed takeover of Abbey National, citing counter bids and possible shareholder revolts as stumbling blocks.

Valuing the company at about £8.5bn, investors in Abbey National were disappointed at the price and the shares fell 3.9 per cent to 549p. Santander, whose shares had been suspended for much of the morning, shed 3.1 per cent to €7.75 despite announcing strong quarterly profits, as investors fretted about the intended capital increase to fund the deal.

Whether in favour of the bid or not, investors were questioning if it was the start of a trend that had been forecast for some time.

HVB Group, which in the past year alone has been speculatively linked with the likes of Citigroup, CS Group and Dresdner Bank, was one of the few stocks in the sector to cling on to gains - ending up 0.4 per cent at €13.03.

Deutsche Bank, which had initially rallied following an upgrade to European investment banks by JP Morgan, fell 0.2 per cent to €58.10.

UBS, which JP Morgan raised to "overweight" from "neutral", added 0.1 per cent to SFr84.80.

The worst performing sector on the Eurotop was technology. Recently hit by downgrades, a weak global outlook and poor guidance from industry leaders, the European sector was stung by sharp declines for Asian peers.

Infineon ended down 3.9 per cent at €9.01, STMicro-electronics shed 1.4 per cent to €15.48 and ASML, the Dutch maker of semiconductor manufacturing equipment was off 4.7 per cent at €11.22.