European stocks close lower

LONDON (AP) - European stocks fell Thursday relinquishing some of their gains as financial stocks saw a reversal led by Germany's Deutsche Bank which said its 3rd-quarter earnings would be hurt by market turbulence. 

The U.K.'s FTSE 100 Index fell 0.4 percent to 6,432.1, while France's CAC-40 Index slipped 0.7 percent to 5,688.8. Germany's DAX Index closed 0.2 percent down at 7,734.7. 

Attention has shifted from the initial euphoria of the Federal Reserve's half-point cut in its key interest rate to the likely action of the ECB and BoE, with investors doubtful that the central banks will follow suit. 

"An emergency cut in the policy rate is not at all likely. ... In the U.K. the scale of any negative impact from the very fast-moving situation in the money markets on the housing market and the wider economy is as yet far from clear,'' said David Miles, an economist at Morgan Stanley. 

Financial stocks fell for the first time in three days as Josef Ackerman, chief executive of Germany's Deutsche Bank, one of Europe's largest banks, warned that its third-quarter results would be hurt by the market turbulence.  

Its shares fell 1.5 percent. 

Meanwhile, troubled U.K. mortgage bank Northern Rock plunged 28.5 percent, extending Wednesday's losses, as the absence of any company stepping forward to declare its interest weighed on the stock.  

The U.K. government also indicated that deposits left after Sept 19 are not guaranteed repayment.  

Broker Citigroup also slashed the bank's target price to 150 pence from 400 pence (euro2.16 from euro5.75; US$3.01 from US$8.03), saying this reflected the "maximum realistic bid.'' 

Allied Irish Banks fell 2.1 percent while France's Credit Agricole dropped 1.5 percent and Spain's Banco Santander lost 0.5 percent. 

High oil prices weighed on the travel sector, with British Airways falling 3.8 percent. 

The London Stock Exchange soared 16 percent following the Qatar Investment Authority's announcement that it had acquired a 20 percent stake - starting a potential bidding war for the LSE.  

This followed an earlier announcement of an agreement between Nasdaq and Borse Dubai under which the Dubai exchange would acquire a 28 percent stake in the LSE from Nasdaq as part of a broader arrangement which would allow the U.S. exchange to pursue its takeover of OMX AB. 

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