European markets closed down today as the region's benchmark indices were pulled down by banks as initial relief on the outcome of last week's stress tests retreated further into the past.

In London, the FTSE 100 fell 0.73% to 6,645.40.

In Frankfurt, Dax lost 1.8% to close at 10,144.34 and the Cac 40 closed at 4,327.99 down 1.84% in Paris.

The European banks index the SX7E dropped 4.87%. European banks are struggling to create profit in a lower-for-longer rate environment and grappling with higher regulatory costs.

Monte Dei Paschi shares dropped 16% today and UniCredit (UNCFF) lost more than 7% as concerns about Italian banks' bad loans persisted.

Commerzbank (CRZBY) closed 6.9% down as it fleshed out last week's news of a 31% decline in quarterly net profit. Earnings were pushed lower by declining profitability at its small and medium-sized lending business. Commerzbank said it "expects the negative rate environment and the adverse markets to further weigh on revenues."

Deutsche Bank (DB - Get Report) and Credit Suisse (CS - Get Report) dropped 4.6% and 6.2% respectively after Stoxx, which runs a series of European equity indices, dropped the banks from the  Stoxx Europe 50 index. The banks were removed because their market capitalizations fell below the 75th place on a list of the Europe's biggest listed companies two months in a row.

Deutsche Bank and Credit Suisse will be replaced by technology company ASML Holding and French construction business Vinci.

In London, Barclays (BCS) dropped 3.6% and the Royal Bank of Scotland (RBS) lost 1.8%.

Semiconductor maker Infineon Technologies (IFNNY) closed more than 4.9% after disappointing quarterly revenue offset the impact of earnings per share that came in slightly ahead of expectations.

Volkswagen (VLKAY) lost 5% today on news the South Korean government had revoked the certification on 80 models following last year's emissions-testing scandal.

In London InterContinental Hotels (IHG) closed 3% higher after the Crown Plaza owner lifted its dividend by 9% even as security fears dented revenue per available room, pushing down overall sales and profit in the first half.

Insurance company Direct Line gained more than 12% today after it announced it would pay out a special dividend of 10 pence a share, amounting to £138 million ($184 million).