European shares tumbled today, tracking sharp falls in US and Asian markets amid worries that a crisis in US mortgage lending is spreading to the US economy.
The DJ Stoxx European banking sector index slid 2.4 per cent and banks were the main contributors to a 1.6 per cent decline in the broader pan-European FTSEurofirst 300 index to 1,441.5 points.
The biggest fallers included Credit Suisse, UBS, Barclays, Deutsche Bank and Royal Bank of Scotland, all down 3 per cent or more.
The FTSEurofirst 300 index hit an intra-day low of 1,434.0, near the year's lowest level of 1,428.2 and down more than 3 per cent so far this year. The index fell 1.1 per cent yesterday.
Asian markets ended sharply lower, the yen held gains against the dollar and US Treasuries rose. Euro zone government bonds were also up.
"This seems to be the second leg of the global fall in equities and there is very little impetus to jump in and buy," said a trader. "It's time to fasten seat belts."
US stocks plunged yesterday in their second-worst sell-off of the year as the impact of losses in the subprime mortgage group cascaded across the financial sector, knocking shares of investment banks and traditional lenders.
The Dow Jones industrial average tumbled nearly 2 per cent to end at 12,075.96 and the Nasdaq Composite Index slid 2.1 per cent to 2,350.6 points.
"Apparently markets have discovered there is a new problem in the subprime market but there is nothing new coming from companies," said Thierry Lacraz, European strategist at Swiss private bank Pictet & Cie.
Agencies