EUROPE MARKETS: European Stocks Slump As Banks Decline, Data Disappoint

By Carla Mozee, MarketWatch OECD foresees slowing growth in Europe

LONDON (MarketWatch) -- European stocks dropped Wednesday, with bank issues lower after some heavyweight financial services agreed to pay a multi-billion dollar fine to settle allegations that traders at the firms helped rig currency markets.

Losses overall accelerated after data underscored weakness in regional economic activity.

Big banking settlement:Five banks have agreed to pay a total of $3.3 billion to U.S., British and Swiss regulators to resolve a long-running investigations into whether the banks engaged in activities within their foreign-exchange units that helped rig spot market prices.

HSBC Holdings PLC, Royal Bank of Scotland Group PLC, UBS AG, Citigroup Inc. and J.P. Morgan Chase & Co. made settlements with British and U.S. authorities. UBS was separately ordered by Switzerland's Finma to pay 134 million Swiss francs ($139 million).

Investors later in the session learned from the European Union's statistics agency that industrial output in the eurozone rose 0.6% in September from August. That figures was just below a rise of 0.7% expected by economists polled by The Wall Street Journal. But the advance didn't reverse the 1.4% drop in August, indicating that third-quarter output will be lower than in the second quarter.

Separately, the Organization for Economic Cooperation and Development said economic growth is set to slow in the eurozone and in the U.K. over the coming months.

Markets: The Stoxx Europe 600 index fell 1.1% to close at 335.09, falling from a five-week closing high reached on Tuesday.

In the banking group, shares of HSBC Holdings PLC (HSBC) dropped 0.3%, RBS (RBS) fell 1%, and UBS AG (UBS) lost 0.1%. Shares of Barclays PLC (BCS) dropped 2.2% as the bank pulled out of late-stage settlement talks with regulators, saying it decided to seek a "more general coordinated settlement."

The pullback in bank shares weighed on the U.K.'s FTSE 100 , which fell 0.3% to 6,611.04. Meanwhile, the British pound fell after the Bank of England cut its forecasts for growth and inflation and signaled it is unlikely to raise interest rates until the second half of next year. The pound (GBPUSD) fell to $1.5817, from $1.5918 late on Tuesday. Read: Pound creeps toward one-year low after action-packed day

France's CAC 40 index gave up 1.5% to 4,179.88 and Germany's DAX 30 index fell 1.7% to 9,210.96.

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