The European markets fell for the first time in three days on Monday, as banking stocks slipped after Bank of America reported deteriorating credit quality and mining stocks declined on weaker metals prices.

The FTSEurofirst 300 index of pan-European blue chips closed 3.51% lower at $786.12 points, while the narrower DJ Stoxx 50 index fell 3.22% to 1,931.76 points.

Around Europe, the U.K.'s FTSE 100 index fell 2.49% to 3,990.86, while France's CAC 40 index slipped 3.96% to 2,969.40 and Germany's DAX index dropped 4.07% to 4,486.30.

Banking stocks retreated after Bank of America Corp. reported rising credit losses and charge-offs, as housing prices continued to drop and the economic environment weakened. HSBC, Europe's largest bank, fell 5.4%, while Barclays, Britain's third largest bank, slid 7.9% and UBS, Switzerland's biggest lender, dropped 4.7%.

Deutsche Bank, Germany's largest bank, lost 8.6% and BNP Paribas, France's biggest lender, slipped 6.6%.

Mining stocks lost ground, tracking weaker metals prices. BHP Billiton, the world's biggest miner, fell 4.35, while Anglo American, the second biggest, slipped 6.4% and Rio Tinto, the third biggest, dropped 5.2%. Copper miner Antofagasta lost 5.3%.

Metro International, the Swedish company that publishes free newspapers in 22 countries, plunged 41% after the company said it will proceed with a rights offer to raise cash as discussions with a potential buyer were terminated.

Hammerson lost 6.9% after JPMorgan downgraded the stock to neutral from overweight and Liberty International slipped 5.8% after it was cut to underweight from neutral by the brokerage.

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