Europe's main stock markets mostly advanced Tuesday but London sank into the red as British-based emerging markets bank Standard Chartered was slammed by allegations of hiding transactions with Iran.
London's benchmark FTSE 100 index of top companies dropped 0.20 percent to 5,797.20 points in midday deals.
Elsewhere, Frankfurt's DAX 30 gained 0.30 percent to 6,939.87 points and in Paris the CAC 40 climbed 0.39 percent to 3,414.96. Madrid rose 0.82 percent and Milan added 0.67 percent.
In foreign exchange trade, the European single currency rose to $1.2414 from $1.2399 late in New York on Monday.
Standard Chartered topped the fallers board in London after US regulators accused the lender of hiding $250 billion (201 billion euros) in transactions with Iranian banks, plunging the banking sector into fresh crisis.
The London-based lender saw its share price collapse 24 percent or approximately £8.0 billion in value to stand at 1,117 pence.
"The focus is still firmly on Standard Chartered," said analyst Fiona Cinotta at trading group City Index.
She added that away from the Standard story, markets were pausing for breath after recent sharp gains caused by positive US jobs data, and improved sentiment over the eurozone debt crisis despite increasing debt woes for Spain.
New York regulators have meanwhile branded Standard Chartered a "rogue" institution" and threatened it with fines and the suspension of its licence.
The Department of Financial Services (DFS) said the London-based giant systematically disguised foreign exchange deals with Iran that potentially opened the US banking system to terrorists and criminals.
Standard Chartered responded that it "strongly rejects ... the portrayal of facts as set out" by the DFS.
The episode weighed on other British financial institutions, with shares in Barclays dropping 1.35 percent to 174.8 pence, HSBC losing 1.02 percent to 554.6 pence and Royal Bank of Scotland sliding 1.66 percent to 225 pence.
Asian markets mostly rose in earlier trade on Tuesday amid growing hopes that the European Central Bank would soon restart its sovereign bond-buying scheme, but gains were capped by profit-taking after recent gains.
Hong Kong finished 0.37 percent higher, Shanghai increased by 0.13 percent, Sydney climbed 0.45 percent and Tokyo rose 0.88 percent, while Seoul closed flat.
Market attention remains fixed on Spain, with speculation swirling that the government would officially ask for eurozone financial aid soon, easing its crippling debt troubles.
European and US shares had risen Monday on expectations that the ECB could resume its Securities Market Programme (SMP) of buying sovereign debts of under-pressure countries such as Spain and Italy.
Bank chief Mario Draghi raised hopes at the end of July by saying the ECB would do whatever was needed to support the euro, which has come under severe strain from the region's long-running debt crisis.