A major French bank, BNP Paribas, announced Thursday that it was suspending three of its asset-backed securities funds, saying it could no longer value them accurately because of problems in the U.S. subprime mortgage market.

The announcement by the bank's BNP Paribas Investment Partners unit sent shock waves through an already sensitive money market.

The bank, France's largest bank by market value, said it was suspending three funds worth a total of 2 billion euros ($2.75 billion): Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia. All funds combined at BNP Paribas Investment Partners are worth more than 350 billion euros ($482.79 billion).

"The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating," BNP Paribas SA said in a statement.

"The situation is such that it is no longer possible to value fairly the underlying U.S. ABS assets in the three above-mentioned funds" and "therefore unable to calculate a reliable net asset value, NAV, for the funds," the company said.

Defaults on subprime loans, or those made to people with poor credit, have climbed sharply in recent months and have triggered concern about the impact on credit markets worldwide. BNP's announcement sent European stock markets lower and stirred concerns that problems among subprime borrowers would further roil markets.

"Who knows where the subprime story is going to pop up again," said Adam Cole of RBC Capital Markets.

BNP Paribas shares dropped 3 percent to 82.81 euros ($114.23) Thursday.

When the bank posted second-quarter results last week, Chief Executive Baudouin Prot assured investors the bank would be virtually untouched by the plummeting valuation of some subprime mortgage portfolios in the U.S. because it has little exposure to the market.

BNP's actions come amid a panic period and the prices of assets remain volatile, said Celent analyst Cubillas Ding.

"Securitized assets that have underpinnings in the U.S. subprime market may now be difficult to put a price tag on given market sentiment — as there is still lingering uncertainty whether the meltdown has greater knock-on effects down the line," he said.

Germany's financial watchdog, BaFin, said Thursday it has yet to see any firm reason to examine the extent of that nation's banks' exposure to the U.S. subprime market.

This week WestLB Mellon Asset Management, the asset management joint venture of German state bank WestLB AG and The Bank of New York Mellon Corp., suspended redemptions from its asset-backed securities ABS Fund, which is part of the West LB Mellon Compass Fund.

WestLB AG denied speculation on Thursday that it is facing a fund liquidity problem.

Other companies, including Union Investment Asset Management, a German mutual fund manager, and Frankfurt Trust, a unit of BHF-Bank, have also halted redemptions.