European Markets Slide

European shares tumbled in early trading on worries about the financial sector and Wall Street's losses on Friday.

Banks shaved 11 points off the FTSE-100, with Lloyds TSB falling 2.9% and HBOS sliding 3.7% on reports that Germany's Commerzbank was about to cut more jobs, although the bank denied having financial difficulties.

"It's becoming a self-fulfilling prophecy. The more investors worry about bad debt and sell these stocks the more difficulties the sector finds itself in," one dealer told the Reuters news agency.

But mortgage bank Abbey National jumped 6.1% after it confirmed it had received a merger approach from Bank of Ireland - although Abbey was likely to reject the proposal. Elsewhere in Europe, Paris and Frankfurt were both down more than 2%.

Tobacco shares took a hit after a Los Angeles court on Friday ordered US cigarette giant Philip Morris to pay a record $28bn (£17.8bn) in damages to a lung cancer sufferer. British American Tobacco dropped 5.6%, while Gallagher and Imperial Tobacco both lost more than 2%.

Terrorist fears also weighed on the market after a hole was blown in the side of a French supertanker near the mouth of the Red sea. The crew said the explosion came from a terrorist attack and oil prices jumped 1.3% to above $30. High oil prices could undermine an already weak recovery in the US.