SHARES in US and European banks were pummelled yesterday after Greece’s admission that it may miss deficit targets set out under its bailout plan increased fears of another global recession.
The STOXX Europe 600 Banking Index fell 2.8 per cent, with French banks BNP Paribas and Société Générale among the worst hit.
FTSEurofirst 300 index of top European shares fell 1.2 per cent to 912.26 points, losing 17 per cent overall in the third quarter, its biggest quarterly fall since 2008.
Morgan Stanley, the second-largest US investment with large exposure to French banks, saw its shares fall 7.7 per cent to a low of $12.47 last night. The cost of insuring against a default by the bank has quadrupled since January to $482,020.
Bank of America shares slumped 9.64 per cent, its lowest level since March 2009, when investors were speculated that some of the biggest US lenders might be nationalised.
The FTSE 100 fell by 1.03 per cent, led by British banks including Royal Bank of Scotland.
Oil fell as Greek fears and a stronger dollar pressured Brent to the lowest settlement in seven and a half months.