Shares in Deutsche Bank, Europe's largest bank, plunged 8 per cent in value yesterday as chief executive Mr Rolf Breuer denied rumours of substantial losses through junk bond trading.

Investors were also rattled by the bank's announcement of its intention to acquire the US Internet-based broker National Discount Brokers (NDB) for $1 billion, a premium of 94 per cent over the company's current market value. Deutsche Bank shares sank at one point to €83.80 but rallied in the final hour of trading to close at €84.55, wiping almost €5 billion off its market value.

Shares in the Frankfurt-based bank had already been sliding for a week, but rumours of a failed junk bond deal in Tuesday's Wall Street Journal, repeated yesterday in a German newspaper, accelerated the slump.

The newspaper reported that Deutsche Bank had experienced problems placing $300 million worth of high-yield but high-risk junk bonds for the US wireless telecommunications provider MainStream PCS Holdings.