LONDON (ShareCast) - European indices finished deep in the red as financial worries persisted and higher oil prices hit transportation stocks.

Banks have fallen back following further losses at US mortgage financiers Freddie Mac and Fannie Mae overnight on worries that the government will have to take them over. France’s BNP Paribas and Germany’s Hypo Real Estate have dropped.

Airlines Air France-KLM and Ryanair and German luxury car maker BMW also fell as oil prices continue to rise. Crude rose to around $117 a barrel on the New York Mercantile Exchange.

Holcim has dropped after the Swiss cement maker’s second-quarter net profit fell to 696m Swiss francs compared with 2.07bn francs last time because of high energy prices and fewer orders.

"The cement industry, with its energy-intensive production process, is feeling the impact of the rapid increase in the price of thermal and electrical power sources very directly," said Holcim.

"So far, the resulting cost increases have only partially been passed on to customers and with a delay," it added.

France’s Lafarge, the world’s largest cement company, and Europe’s biggest buildings materials supplier Saint Gobain also fell back.

In M&A news, privately owned Schaeffler has increased its offer for German auto parts maker Continental to €75 per share, up from €70.12, but it has also agreed to limit its stake to a maximum 49.99% until at least 2012.

In economic news, Sweden's jobless rate fell to 5.8% in July compared to a 8.1% jump in the previous month.

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