A poor performance by the Dow Jones index in New York had a knock-on negative effect on European stock markets.

Frankfurt

Germany's benchmark Xetra Dax index fell deeper into negative territory on Wednesday.

By 1530 GMT it was down 1.8% at 4,690.62 points as profit-taking continued.

The floor DAX fell 1.8% to 4,693.98 points.

"We're going down with the US market as our market lacks impulse," one trader said.

Traders said the ever weaker dollar, now just above 1.67 marks, was hurting car makers and other export-dependent sectors as German products become less affordable abroad. BMW led car makers down, tumbling 5.4% to 1,140 marks.

Wednesday's selling sentiment prevented Deutsche Bank from holding onto early gains after it announced it would buy Credit Lyonnais Belgium. The stock fell 4.1% to 95.64 marks.

Dresdner Bank fell 3.7% to 68.34 marks, hurt by a Merrill Lynch downgrade saying the bank was too hasty in seeking acquisitions and mergers.

The stock had jumped last week on a rumour it would co-operate with investment bank Credit Suisse First Boston.

Siemens fell 2.8% to 112.25 marks a day before it is expected to provide a 1998 earnings per share figure seen little changed from the year before, analysts said.

Paris

The slump in New York also weighed on French investors.

The Cac 40 index closed down 38.43 points at 3,649.91.

"We're following New York, which is very weak because of the bad news from Boeing," said one Paris dealer.

"We also have the negative influence of Total which is still under pressure. But overall, the feeling is that this is a phase and we should start moving up in the next few sessions."

Pharmaceutical stocks Synthelabo and Sanofi fell steeply as the speculation the two companies will anounce a merger tomorrow mounted.

"The shares gained when the speculation first appeared and now they're coming off because it has been digested," said the dealer.

"There's been so many mergers this week and this is the least inspiring of all."

Total closed down 28 ffr, or 4.5 pct, at 590. Elf Aquitaine fell 13 to 660, pressured by the expected increase in competition in the sector.

Auto stocks were mixed, with Peugeot sliding 18 to 857 while Renault was up 2.10 at 251.10, boosted by a sharp increase in November French new car registrations yesterday.

In the financial sector, Societe Generale closed up 10 at 878.

Chairman Daniel Bouton said the bank would like to form an alliance with, and preferably hold a large stake in Credit Lyonnais when it is privatised next year.

BNP gained 10.80 to 425 and Paribas was down 6 at 474.