European stocks pare losses as oil retreats

European stocks pared losses in late trading on Tuesday but remained deep in the red as oil prices dropped 5 percent. At 1518 GMT, the FTSEurofirst 300 index of top European shares was down 1.96 percent at 1,111.68 points, after falling by more than 3 percent.

U.S. crude oil futures sank more than $7 to just over $137 a barrel after the U.S. Federal Reserve Chairman Ben Bernanke said that a weakening housing market, tighter credit and rising oil prices threatened the economy.

Banking stocks were the biggest laggards, hit by fresh worries over the health of the financial services sector, with Royal Bank of Scotland down 7 percent and Fortis down 10.7 percent. (Reuters)