European stocks closed lower Wednesday as U.S. markets eased from record highs in a volatile trading session that saw bank stocks hold down gains across major benchmarks and yet another surge in the U.S. dollar.

Britain's FTSE 100 ended modestly in the red after a session that saw the benchmark rise as much as 75 points at one point in morning trading, only to give back all of those gains and more during the budget statement address to parliament from Finance Minister Philip Hammond

The U.K.s decision to leave the European Union will slam the breaks on the country's economic recovery and add more than £122 billion in extra borrowing over the next five years, Hammond told lawmakers as he abandoned plans for a budget surplus by 2020 and said debt would rise to just under £2 trillion in the near term. Interestingly, the independent Office for Budget Responsibility pegged the direct costs of Brexit at £58.7 billion over the next five years. 

Benchmark 10-year U.K. government bonds, known as Gilts, reacted sharply to the new borrowing figures, with yields rising as much as 7 basis points to 1.45% in advance of accelerated sales of new debt from the government.

Germany's DAX index, however, slid around 0.48% on the day as shares of the country's biggest lenders suffered after the European Commission unveiled plans to tighten capitalisation rules and introduce requirements for U.S. and foreign lenders operating in the EU.

Europe's Stoxx 600 Banks index fell around 0.5% on the session while the shares of major European banks fell in concert, holding down gains for broader equity indices.

Commerzbank (CRZBY) was one of the session's biggest decliners, with shares falling 1.75% in Frankfurt trading to €6.81 each. Deutsche Bank (DB) was another notable decliner, with shares down 0.4% to €14.83. In Switzerland, Credit Suisse (CS) was off 1.15% to Sfr13.77.

Bond markets were also active throughout the day, with yields on Germany's 2-year government bonds (which move opposite to prices) hitting a record low of -0.74% early in the session following a series of comments from key European Central Bank rate-setters that point to an extension of its €1.5 trillion quantitative easing program beyond its March 2017 deadline.

However, market reaction to a Reuters report that the ECB is ready to lend more of the billions in government bonds it has bought through its QE program sent yields spiking later in the session, with 10-year bunds jumping 6 basis points to 0.27% and 10-year French governments bond yields rising 4 basis points to 0.79%.

The U.S. dollar surged to another all-time high of 101.89 against a basket of global currencies following better-than-expected durable goods orders and consumer sentiment data from the world's biggest economy that no only cements the case for interest rate increases in December but could also validate bets for faster monetary tightening from the Federal Reserve. The move took the euro to a 19-month low of 1.0553 even after private sector data showed eurozone economic activity expanded at its fastest rate of the year in November.  

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