European markets fell for the second day on Tuesday, as banking stocks slipped on renewed pessimism about an economic recovery.

The National Association of Realtors in the U.S. said in its report that existing home sales rose 2.4% to an annual rate of 4.77 million units in May from a revised 4.66 million units in April. Economists had expected sales to rise 3% to 4.82 million units from the 4.68 million units originally reported for the previous month.

European Central Bank Governing Council member Christian Noyer said the central bank must be ready to absorb excess liquidity as soon as necessary. Speaking to reporters in Paris, Noyer said, What is important for us is to be ready to withdraw liquidity gradually, at the appropriate pace when the time comes.

The global economy is still far away from a proper recovery and restructuring of banking system is necessary for growth, European Commissioner for Competition, Neelie Kroes said today.

Crude for August delivery rose $0.44 to $67.94 a barrel on the New York Mercantile Exchange, by the time the European markets closed.

The FTSEurofirst 300 index of pan-European blue chips closed 0.42% lower at 833.67 points, while the narrower DJ Stoxx 50 index fell 0.57% to 2,072.38 points.

Around Europe, the U.K.'s FTSE 10 index fell 0.10% to 4,230.02 and France's CAC 40 index declined 0.21% to 3,116.82, while Germany's DAX index rose 0.29% to 4,707.15.

Banking stocks were among the worst losers. BNP Paribas, France's largest bank, fell 1.3%, while Deutsche Bank, Germany's largest, declined 1.2% and Banco Santander, Spain's biggest lender, slipped 1.4%. Barclays, Britain's third largest bank, lost 1.9%.

Swiss Life Holding dropped 5.1% after after UBS downgraded the stock to sell from neutral.

On the other hand, GlaxoSmithKline, Europe's biggest drugmaker, rose 1.6% after the company said it has signed a deal with Chroma Therapeutics, giving it access to the company's experimental compounds for inflammatory diseases such as rheumatoid arthritis.

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