A fresh bout of selling on Wall Street and a weaker dollar saw the biggest slide in European stocks for some weeks.

Frankfurt

A further weakening of the dollar, a driving force behind the German market's rally last week, sent shares diving through key support levels.

The leading Dax index closed down 241 points at 4,782 while the later-trading Xetra Dax was down 244 points at the same level late in trade.

Dealers said German share prices had moved up too quickly last week in merger euphoria as Germany's Deutsche Bank unfolded its takeover plans for Bankers Trust, and chemical giant Hoechst negotiated a merger of its life sciences activities with France's Rhone-Poulenc.

Ralf Zienert, a trader at Credit Suisse First Boston, said the stronger dollar had accelerated the largely unfounded share price gains, and now that it has slipped, German stocks can't support their high levels.

But "a fall to 4700 points would be too much for today's session," he said.

Shares in car maker BMW and chemical group Henkel are leading the blue-chip retreat.

BMW slid almost 8% in intraday trading as investors showed concern about its ailing Rover unit and speculation over possible changes in the group's executive ranks.

Dealers attributed Henkel's retreat to heavy downside derivatives trading in an attempt to drive down key stock prices before year-end via the futures market.

Paris

French shares tumbled as a weaker dollar against European currencies and overnight falls on US and Asian stock markets bruised sentiment across European equity markets.

The leading Cac 40 index closed down 155 points at 3,688.

However, falling share prices in Paris come amid a flurry of major corporate news, with oil group Total confirming its takeover of Belgium's Petrofina, while Germany's Hoechst and France's Rhone-Poulenc confirmed the creation of the world's biggest pharmaceuticals company, Aventis.

In addition, French pharmaceutical companies Synthelabo and Sanofi declined to comment on reports that they are on the verge of merging, while merger speculation continues to buoy shares in conglomerate Bouygues.

Leading the market's losers, shares in French petroleum company Total tumbled almost 10% at the opening on the Paris Bourse, following the announcement earlier that the company was taking over Belgian rival Petrofina.