Europe stocks hit 3-yr closing low, oil caps losses

The DJ Stoxx banking index .SX7P, which fell 3.8 percent on Tuesday, has lost about 40 percent so far this year, hammered by fears over the debacle in the U.S. subprime mortgage market that forced banks to unveil huge asset writedowns and emergency capital injections.

Peillon said investors were also nervous ahead of quarterly earnings reports from U.S. banks, that could shed light on damage from the credit crisis.

JP Morgan (JPM.N) and Merrill Lynch MER.N are due to report results on Thursday. Around Europe, Germany's DAX index .GDAXI ended down 1.9 percent, the UK's FTSE 100 index .FTSE fell 2.4 percent and France's CAC 40 .FCHI shed 2 percent.

Mining shares featured among the biggest losers, retreating along with metal prices. Rio Tinto (RIO.L) lost 4.3 percent, BHP Billiton (BLT.L) fell 4.8 percent and Xstrata (XTA.L) dropped 4.1 percent.