Deutsche Bank and Trump concerns give traders the jitters

A plunge in bank shares yesterday put a halt to the optimism that lifted European equities last week, sending them to their biggest slide since early July.

Growing worries over Deutsche Bank’s capital buffers dragged the stock to a fresh all-time low and cast a pall on all its peers.

Across Europe, the French Cac 40 fell more than 1.7 per cent while the German Dax dropped 1.5 per cent. More than £23 billion was wiped off the FTSE 100 in London as the index was also dragged down by financial stocks and also renewed fears of a Donald Trump presidency ahead of the first US presidential debate.

Losses on Wall Street also deepened in volatile trading yesterday morning, as Pfizer led a decline in healthcare stocks and Deutsche pulled financials down.

Dublin

The Iseq in Dublin fell 1.5 per cent on a difficult day for many of the index’s leading stocks.

Bank of Ireland

was one of the worst affected bank stocks in Europe in the wake of the concerns about Deutsche. It finished the session down 5.4 per cent, and was particularly hit in afternoon trading.

Swiss-Irish food company Aryzta fell almost 1.6 per cent, following the release of its full-year results. Profits fell by almost 9 per cent, with under-fire chief executive Owen Killian blaming contract renewals for some of its poor performance.

As fears grow over a possible "hard Brexit", some Irish stocks heavily linked to the UK also underperformed. Paddy Power Betfair dropped by 2.5 per cent while ferry operator Irish Continental Group (ICG) fell 2.24 per cent.

London The investor concern over Deutsche sparked a sell-off of banking stocks, with Royal Bank of Scotland (RBS) down 2.8 per cent, or 5.1p, to 177.5p, and Barclays down 1.9 per cent, or 3.3p, to 168.1p.

On the UK's top-tier index, Standard Life shares dropped by 10.9p to 342.3p amid news its investment arm would lift a trading suspension on its UK property fund, saying Britain's commercial property market has "stabilised" in the wake of the EU referendum.

UK supermarket stocks also slumped after the British arm of Aldi said it will invest £300 million in store revamps following another year of record sales, which grew by £7.7 billion in 2015. It hurt shares of UK rivals, with Sainsbury down 5.2p to 248.7, Morrison down 2p to 216.4p and Tesco down 5.1p to 176.5p.

Europe

Last week’s bullishness, triggered by confidence that central banks will continue to spur growth, is quickly fading amid growing worries about Europe’s recovery and the state of its lenders.

Deutsche slumped 7.5 per cent, following a report German chancellor Angela Merkel has ruled out any state assistance before the national election next year. Italy's UniCredit and BNP Paribas were among other financial firms that lost at least 3 per cent.

New york

Wall Street fell yesterday as

Deutsche Bank

weighed on financials and investors hunkered down for the first debate between candidates Hillary Clinton and Donald Trump.

Pfizer fell 1.81 per cent after it decided against splitting into two. The stock was the biggest drag on the S&P 500 healthcare index, which declined 1.22 percent. The Nasdaq biotechnology index dipped 1.3 percent, with cancer drugmaker Celgene falling 2.85 per cent.

Deutsche Bank's U.S-listed shares fell as much as 7.9 percent to a record low of $11.83 and triggered declines among big Wall Street banks. The S&P financial index fell 1.5 percent, with JPMorgan's 2.19 per cent decline and Bank of America's 2.77 per cent slide weighing most.

The CBOE Market Volatility index, also known as Wall Street’s “fear gauge”, rose 17.9 percent, clocking its biggest percentage gain in two weeks.

– Additional reporting: Bloomberg/Reuters/PA