Deutsche, which last week issued a profit warning, was pushed lower on a rise in credit default swap spreads, CMC markets analyst Jasper Lawler said.
"Weak earnings from European banks, notably that of Deutsche Bank, have seen investors significantly reassess the chance of an earnings turnaround after years of regulatory fines for past misdeeds.
"In the days after Deutsche Bank issued a surprise profit warning, credit default swap spreads ballooned as investors started to question the bank’s ability to fund itself. The CDS jump has caused a sharp drop in Deutsche Bank shares."
But Deutsche wasn't the only one: global equities markets tanked, led by finance stocks. The FTSE 100, which finished at 5,689 points - its lowest since mid-January - was dragged down by Worldpay Group, which fell 8.7 per cent to 275.6p, and Hargreaves Lansdown, which fell 7.6 per cent to 1,127p.
Meanwhile, UK banks were also hit, with Barclays finishing 5.3 per cent lower, at 163.9p, while Lloyds fell 3.9 per cent to 59.4p and HSBC dropped 4.2 per cent to 438.4p. RBS fell 4.6 per cent to 230.7p.
Other European markets followed suit, with the Cac falling 3.2 per cent to 4,066 points, while the Dax fell 3.3 per cent to 8.979 points.
In the US, the S&P 500 was down 1.85 per cent in mid-afternoon trading, while the Dow Jones was down 1.9 per cent and the Nasdaq was down 2.2 per cent.
"Markets are clearly worried about a global economic downturn at a time when central banks have little dry powder left to fight off recessionary forces," added Laith Khalaf, senior analyst at Hargreaves Lansdown.
"The tables were turned in the UK stock market today with recent winners suffering from profit-taking, while the miners were virtually the only stocks to keep their heads above water.
"If you listen really hard, you can hear some reasons to be positive. Ironically cheaper oil is one; this is a huge boost to the coffers of oil consumers across the globe who will find more money in their pockets to spend on other goods and services. Likewise the continued strength of the US economy and low interest rates across the developed world should bode well for stock markets, but for the time being these factors are being totally drowned out by negative sentiment."
8 February 2016 @ 4:30pmFTSE 100 (UKX)