European shares suffered their largest one-day fall in over four years today, driven by a drop in financial stocks as concern grew that the worsening credit environment could drag on economic growth.
The FTSEurofirst 300 index of leading European shares ended the day 3.4 per cent lower at 1,440.81 points, its lowest level since mid-March this year, and its largest daily percentage fall since March 2003.
The DAX-New volatility index hit its highest in almost four years as investors panicked about the possibility that the liquidity squeeze in the financial markets may hit economic growth, particularly in the United States.
Countrywide Financial Corp the top US home lender, said it drew down an entire $11.5 billion bank credit line as a global credit shortage limited its access to short-term cash.
Shares in bank stocks were the largest negative weight on the FTSEurofirst, which is now on track for its fifth successive weekly fall and is now down about 3 per cent so far this year.
The overall Iseq index was down 319.09 points or 3.81 per cent on the day.