The European markets fell for the third day on Tuesday, as a report showed the euro-zone economy contracted more than estimated in the fourth quarter and investor became anxious over the approaching onslaught of corporate earnings reports with the start of the first quarter reporting season.

A final report from the Eurostat showed that Euro-zone gross domestic product contracted by a record 1.6% quarter-on-quarter in the final three months of 2008. The pace of decline was slightly up from the previously estimated fall of 1.5%. GDP fell 0.3% each in the previous two quarters.

Crude for May delivery fell $1.26 to $49.79 a barrel on the New York Mercantile Exchange, by the time the European markets closed, on anxiety over the upcoming corporate earnings reports and doubts about global energy demand.

The FTSEurofirst 300 index of pan-European blue chips closed 0.70% lower at 760.69 points, while the narrower DJ Stoxx 50 index fell 0.49% to 1,872.38 points.

Around Europe, the U.K.'s FTSE 100 index slipped 1.58% to 3,930.52, while France's CAC 40 index slipped 0.94% to 2,902.31 and Germany's DAX index fell 0.63% to 4,322.50.

Banking stocks lost ground after the London-based Times said in a report that the International Monetary Fund is expected to raise its estimates for U.S. bad debt to $3.1 trillion from its January prediction of $2.2 trillion, with estimates of another $900 billion of toxic assets from Europe and Asia.

Royal Bank of Scotland, Britain's second largest bank, dropped 10.4%, while Barclays, the third largest, slid 8.6% and Lloyds Banking Group, Britain's biggest mortgage lender, fell 8.5%.

BNP Paribas, France's largest bank, declined 3%, while Deutsche Bank, Germany's biggest lender, lost 4.1% and UBS, Switzerland's largest bank, dropped 5.2%.

Heavily weighted oil stocks edged lower after crude oil prices fell below $50 a barrel. BP, Europe's biggest oil company, slipped 1.7%, while Royal/Dutch Shell, the second biggest, dropped 2.6% and Total, the third biggest, dipped 1.2%.

Wavin, Europe's biggest maker of plastic pipes for sewers, tumbled 25% after the company said the European construction market was unlikely to pick up this year and the company will take firm actions should more cost cuts be needed.

Saint Gobain, Europe's largest supplier of building materials, slipped 6% and Wolseley, the world's biggest supplier of heating and plumbing gear, dropped 8.7%.

BMW, the world's biggest maker of luxury cars, fell 4.4% after the automaker said its March vehicle sales fell 17% from a year earlier.

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