Paris - French shares shrugged off a substantial interest rate cut by the European Central Bank and ended Thursday's session with a big loss.

The Paris Bourse's CAC 40 index closed off by 6.38 per cent, at 3,387.25, as all 40 listed stocks lost ground.

The sell-off was led by steel giant ArcelorMittal, which lost nearly 20 per cent, to 16.75 euros, on fears that the recession will be deeper and more stubborn than expected.

Other industrials also had a very bad day, with French-American telecommunications equipment supplier Alcatel-Lucent off by 14.32 per cent, at 2.10 euros, and car makers Peugeot and Renault losing 14.16 and 13.62 per cent to, respectively, 18.70 and 22.52 euros.

Shares across Europe declined sharply after the International Monetary Fund (IMF) announced that the world's industrial nations would next year go through the worst recession since 1945. (dpa)