Profit-taking and a poor start on Wall Street pushed European stocks into the red, despite news of a massive chemicals merger.

Frankfurt

Germany's blue-chip share index relinquished its early gains to close 0.98% lower as the Dow Jones Industrials Average fell 0.75% in early trade, dragged down by profit-taking after the recent rally.

But it was the merger of Ciba chemicals giant and rival Clariant which grabbed the headlines.

Their announcement boosted Ciba shares 14% and shares in Clariant rose by 4%.

The news also buoyed chemicals shares across Europe amid speculation of further consolidation in the sector.

German pharmaceutical and chemicals group Hoechst, which owns 45% of Clariant, rose nearly 5% to a more than 12-week high, but then dropped to close 0.81% lower as the broader market fell.

"Obviously Hoechst is a big winner out of this and will hold around 25% of the merged company but the outlook now for the whole European chemical sector is for more of the same," said a trader at a Frankfurt brokerage.

It was left to the dollar to provide the bull market of the day, as fresh confidence about US. economic growth prospects amid a calmer political backdrop pushed the currency to a one-month high against the yen and a six-week peak against the mark.

Paris

French stocks nudged into the red at end of trade, closing three points lower amid a lack of market-driving news and the weak performance on the Dow.