LONDON -- Key European stock markets slipped back Tuesday, failing to build on their recovery from last week's sharp fall in share prices, amid disappointment that a German interest rate cut was only a small one.


The Bundesbank let a key money market rate fall for the first time in nearly three months. The central bank said its securities repurchase interest rate -- which sets the tone for other short-term money market rates -- fell to 5.97 percent from 6 percent, the first time below 6 percent in five years.


And the Belgian National Bank followed the Bundesbank move, cutting its key central rate to 6.25 percent from 6.40 and its end-of-day rate to 7.75 percent from 7.90. The cut was its second in less than a week and reflected the continued strength of the Belgian franc against the mark.


German share prices eased from highs reached in pre-bourse electronic deals and Paris and London moved sharply lower.


Earlier, Hong Kong stocks closed well down on a steep slide in banking stocks and investor concerns that prices fetched at a government land auction were too high. The blue-chip Hang Seng Index ended down 261.87 points or 2.52 percent at 10,148.36.


The London market, after bouncing up 46 points on Monday, was also weak in morning trading, dragged lower by weakness in HSBC and other Hong Kong-related stocks. HSBC was down 44 pence at 901 and Standard Chartered fell 40 pence to ?11.75.


Dealers said the smaller-than-expected reduction in the money market repo rate also hit sentiment.


In Paris shares in media group Havas were over 1 percent higher in a weaker market, and dealers said the rise was due to broker Dupont Denant renewing a buy recommendation. The stock stood 5.90 francs higher at 477.90.


The dollar lost ground during the European morning session after the small cut in the Bundesbank's repo rate reinforced the central bank's cautious rate stance. By 2:30 P.M. Moscow time it was quoted at 1.7023 marks from Monday's close of 1.7046, and was at 104.50 yen from 104.05.