European stocks ended lower on Wednesday, as news of strong demand for the Federal Reserve's $20 billion auction designed to ease tensions in credit markets failed to boost banking shares.
Stocks extended their losses late in the session after Standard & Poor's cut its ratings on U.S. bond insurer ACA Financial Guaranty Corp by 12 notches to "junk" from investment grade as part of actions on six bond insurers.
Energy stocks rose along with crude oil prices after data showed a steeper-than-expected drop in U.S. crude oil inventories. Royal Dutch Shell gained 2.2 percent, and Total added 0.4 percent.
The FTSEurofirst 300 index of top European shares unofficially closed 0.4 percent lower at 1,482.94 points. Europe's benchmark index is now down a thin 0.04 percent on the year, on track to record its worst yearly performance since 2002.
The Fed auction on Monday was part of a coordinated effort by central banks to thaw a freeze in global money markets that has threatened economic growth.
"It's a very efficient action that shows how determined the central banks are in dealing with the credit squeeze," said Valerie Plagnol, chief strategist at CM-CIC Securities, in Paris.
"It's a good step forward, but we still have to wait until the end of the year, and banks have to continue to absorb (structured investment vehicles) onto their balance sheets before we see the tensions easing," she said.
The Dow Jones STOXX bank index ended down 0.7 percent, with UBS down 1.7 percent, and Barclays down 2 percent.