After opening sharply higher in the wake of the US Federal Reserve's bail-out of insurance giant AIG, French shares were pulled into the red on Wednesday by a weak Wall Street, ending the session at a low for the year.

The Paris Bourse's benchmark CAC 40 closed off by 2.14 per cent, at 4.000.11, with losers outnumbering winners by 13 to 1.

The losers were led by troubled Franco-American telecoms equipment supplier Alcatel-Lucent, which slumped by 8.51 per cent, to 3.15 euros, and steel producer Arcelor-Mittal, which lost 7.96 per cent, to 39.67 euros.

Buoyed by the AIG rescue, insurance giant Axa was one of the session's bright lights, gaining 0.30 per cent, to 19.82 euros.

But banking shares could not hold on to their gains and plunged in the last hour of trading. BNP Paribas lost 3.27 per cent, to 56.19 euros, while Societe Generale was down by 2.86 per cent, to 54.37 euros.

Credit Agricole, France's largest retail banking group, slid by 2.52 per cent, to 11.77 euros.