Stock markets in Europe fell on Wednesday in reaction to the escalating debt problems for the region. The European Central Bank disclosed that 523 of European banks applied for funding from central bank totally the amount to 489 billion euros equivalent to $641 billion. Analysts expected the funding request to accumulate up to 310 billion euros.

The Euro Stoxx 600 index declined 0.5 percent to close at 237.3. The index initially jumped 1.3 percent but fell after the news of the requested ECB funding amount.

Chief economist, Christian Tegllund Blaabjerg from FIH Erhversbank commented, “The good news is a lot more banks will be well funded throughout the next three years. They need to place the money short term and will be buying bonds in European sovereign countries, obviously,” he further added, But on the flip side of the coin, it also signals a lot more banks than originally thought need capital and that is negative news, It sort of implies the banking sector is far worse off than originally expected.”

London’s FTSE 100 index dropped 0.5 percent to 5.389.7 with banking sector taking the biggest hit. Energy sector also remained under pressure as the BP PLC fell 1 percent while BG Group PLC declined 1.6 percent.

Germany’s DAX 30 index declined 0.9 percent to close at 5,791.5 with Metro AG as one of the major bears which fell 3.8 percent while Utility E.On AG dropped 16 percent. However auto stocks attracted investors as BMW AG gained 0.6 percent and Daimler surged 1.6 percent.

France’s CAC-40 index plunged 0.8 percent to 3,030.5. Carrefour SA declined 4.7 percent among the decliners by French stock exchange.