LONDON, Nov 24: European stocks, which have performed strongly recently, fell back sharply on Friday, with London banking shares undermined by concern about bad debts and French exporters hit by weakness of the dollar.

In London the FTSE index of 100 leading shares was showing a fall of 0.89 per cent to 6,085.40 points.

In Frankfurt the DAX index of 30 leading shares had shed 1.31 per cent to 6,390.40 points and in Paris the CAC 40 slumped by 1.20 per cent to 5,360.16 points.

In London, banking shares fell in response to brokerage comment from Morgan Stanley expressing concern about recurrent loan problems, saying that the banks were likely to face increased costs in dealing with bad debts.

It singled out particularly Lloyds TSB and the price of stock in the bank fell by 1.87 per cent to 551 pence. Stock in Barclays shed 1.64 per cent to 688 pence.

In Frankfurt, sentiment was affected by weakness in Tokyo, and shares in chemical group Bayer fell by 2.02 per cent to 39.28 euros, having risen on Thursday after the group announced the sale of its chemicals subsidiary H.C.

Insurer Allianz fell by 1.43 per cent to 150.8 euros. A trade union said that the bank would drop any job cuts until the end of 2009, having said in June that it wanted to shed 5,000 jobs in its business in Germany.

Shares in the airline Lufthansa fell by 1.78 per cent to 18.76 euros even though it had said it would maintain or slightly increase its dividend.

Shares in Paris were set back by a fall of the dollar against the euro to 1.31 to the European currency, the highest level since April 2005.

Shares in airline Air France-KLM were showing a fall of 3.75 per cent to 29.01 euros, continuing a decline on Thursday in response to news that the company had begun exploratory talks on a link with struggling Italian airline Alitalia.

Shares in the European aerospace group EADS fell by 1.46 per cent to 23.01 euros on the fall of the dollar and after it announced a delay in a board meeting on the launch of the A350 series airliner.

Shares in auto group PSA Peugeot Citroen fell by 2.68 per cent to 47.23 euros in line with general weakness in the European auto sector.—AFP