Key European share index at record closing low

A key European stock index fell to a lifetime closing low on Tuesday, led down by oil stocks as crude prices slipped towards $40 a barrel.

The FTSEurofirst 300 fell 1.6 percent to close unofficially at 671.51 points, the lowest close since the index's inception in July 1997.

"There is disappointment that the interventionist policies of governments aren't coming together fast enough," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"The market is being burdened with such huge cash calls and issuance of corporate debt, as well as government stock," said Lenhoff.

European credit default swap spreads widened sharply on Tuesday, in response to the deteriorating economic climate and growing financial industry losses.

Crude prices, which slumped 10 percent on Monday, failed to stage a recovery and hovered around the $40 mark amid worries about demand in th face of worldlwide economic sdowdown. BG Group fell 5.3 percent as its planned takeover of Australian coal seam gas firm Pure Energy moved closer.

BP fell 4.1 percent after announcing it would scale back its near-term oil and gas production growth target, as falling oil prices prompt the company to rethink investment plans.

Total, ENI, Royal Dutch Shell, and Statoil were between 2.3 and 4.6 percent lower.

Bank stocks, the worst affected by the stock slump that has accompanied the crisis on the world's credit markets, were broadly lower.

HSBC which fell after announcing a 12.5 billion pounds rights issue on Monday, was down another 1 percent.

Lloyds, Credit Suisse, UniCredit and Barclays were down between 2.5 and 7.9 percent.

Across Europe, the FTSE 100 index fell 3.1 percent, Germany's DAX was down 0.5 percent, while France's CAC 40 fell 1 percent.

"The uncertainty about the financial ramifications of the bail-out measures for government budgets and the uncertainty as to how the various capital tranches of the banks will be handled in the event of nationalisation are currently weighing on the market," said analysts at UniCredit in a note.