European equities retreated yesterday amid weakness across the banking sector prompted by concerns about the impact of the crisis in money markets.

The FTSE Eurofirst 300 fell 20.8 points, or 1.4 per cent, to 1,486.46. Spanish banks were prominent decliners amid rumours of liquidity problems after comments from Adam Applegarth, Northern Rock chief executive, who said three unnamed lenders had sought assistance from the European Central Bank.