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According to Reuters, the pan-European FTSEurofirst 300 was 0.7 per cent lower at 08:15 GMT, taking it to 1,014.80 points.
The Fed's decision to move the rate from 0.5 per cent to 0.75 per cent - the first time it has been raised since the financial crisis began - caused banks to drop in the morning session, with BNP Paribas, Banco Santander, HSBC and Barclays sliding by up to 2.1 per cent.
Similar declines were also seen on Asian markets, where the Nikkei 225 ended the day on 10,123.58 points, a fall of 2.05 per cent.
Severn Investment Management's Justin Urquhart Stewart told the news source that the Fed's move has had negative repercussions for financial stocks.
"The repo rate going up has brought about a change in tide of the cost of money," he remarked.
Posted by Greg Secker
