Irish banks dragged European bourses lower on Wednesday as concerns over increased regulation from the European Union continued to weigh on sentiment.

Shares in Bank of Ireland and Allied Irish Banks and posted double-digit declines after losing nearly 10 per cent on Tuesday.

Together the two banks have received €7bn ($10.3bn) in state aid and been allowed to offload troubled assets into the National Asset Management Agency, a “bad bank” created by the government.

The Bank of Ireland, which submitted a restructuring proposal to the EU in September, fell 25 per cent to €1.65. Allied Irish Banks, which has yet to submit its documents, slid 16.6 per cent to €1.75.

Insurer Irish Life & Permanent sank 12.3 per cent to €4.71.

The FTSE Eurofirst 300 was down 1.9 per cent to 980.23. In Frankfurt, the Xetra Dax was down 2.5 per cent to 5,496.27, while the CAC 40 in Paris slipped 2.1 per cent to 3,663.78.

Reports that European van makers would have to cut new vehicles’ carbon emissions by 14 per cent by 2016 sent motor industry shares lower.

Germany, France and Italy had asked the European Commission to push the deadline back to 2017 in light of the downturn in the car market.

Fiat declined 6.3 per cent to €9.96 and Renault slid 7 per cent to €30.07.

Parts makers were also down. Michelin fell 5.9 per cent to €50.25 and Valeo was down 5.4 per cent to €18.71.

In Germany, BMW declined 3.9 per cent to €33.13 and Daimler lost 5.3 per cent to €33.22.

Volkswagen slipped 0.9 per cent to €110.16 after gaining earlier in the day. The group said it had raised its sales target for China this year by 130,000 vehicles.

Nordea Bank climbed 3.8 per cent to SKr77.25 after the Swedish financial announced a better-than- expected third quarter profit of €832m. Peer SEB advanced 0.8 per cent to SKr41.80 while Handelsbanken retreated 4.3 per cent to SKr184.50.

Sweden’s second-largest bank by market value reported a 15 per cent year on year decline in third quarter profits. While earnings beat consensus estimates, traders said the results were accounted for in the share price.

Deutsche Bank was 3.1 per cent weaker at €48.90. Traders cited rumours of a possible rights issue on Thursday.

The bank, which pre-announced results last week, agreed to acquire Belgian Sal Oppenheim’s private banking operations for €1bn. The bank said the sum could be paid for in Deutsche shares.

In Belgium, Fortis retreated 4 per cent to €2.76. The stock has declined over 10 per cent since Monday, when Dutch peer ING said it would restructure and conduct a €7.5bn rights issue.

Traders said Fortis had fallen on the ING announcement but that the read-across was misplaced.

Groupe Eurotunnel edged 0.3 per cent higher to €6.77 after its chief executive said the group was considering a bid for the high-speed UK train route that runs from the Channel Tunnel to London. The permit would cost Eurotunnel £1.5bn-£2bn ($2.5bn-$3.3bn), he said.

Assa Abloy rose 4.6 per cent to SKr120 after the Swedish lock maker posted a better-than-expected operating profit of SKr1.35bn ($191m).

Novozymes, the Danish industrial enzyme maker, reported that third-quarter earnings before interest and tax rose 18.2 per cent year on year to DKr455m ($90m). It shares were 2.6 per cent higher at DKr458.

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