Shares slide again amid bank fears
European stocks have fallen again as concerns over the financial health of French banks reignited, and any optimism over Wall Street's opening dissipated.
The wild swings on a daily basis and across time zones highlight how volatile markets are at the moment amid concerns over the global economy and the levels of debt in both the US and Europe.
France's banks bore the brunt of the selling once again, just a day after rumours over Societe Generale's financial health sent investors scuttling out of the sector.
Concern over Europe's ability to tackle its debt crisis - which now threatens to engulf large economies such as Italy and Spain and is hampering growth in France - made wider waves and shares in many European banks fell.
After an early rebound, bank shares across Europe were down, some sharply, including Societe Generale, which has followed up Wednesday's 15% decline with another 8% drop. As a result, France's CAC-40 underperformed its peers, trading 2.8% lower at 2,920. The FTSE 100 index of leading British shares was down 0.7% at 4,975 while Germany's DAX fell 1.2% to 5,545.
A complete turnaround in Wall Street futures has added to the unease - Dow futures were down 1.2% at 10,595 while the broader S&P 500 futures fell 1.5% to 1,106. For much of the European session, they had been trading an equivalent rate higher.
Thursday's volatility came after Wednesday's hammering of stocks in Europe and the U.S. Any investor cheer to the news that the Federal Reserve was keeping its super-low interest rates until the middle of 2013 dissipated as they interpreted that stance to mean that the US economy will not improve substantially by 2013.
Worries over Europe's debt crisis spreading have also not been calmed by a more active role in the bond markets from the European Central Bank.
"Modest monetary easing from the Fed and ECB purchases of Italian and Spanish debt have failed to calm investor fears that the global economy is heading into a renewed recession driven by the escalating eurozone sovereign debt crisis," said Lee Hardman, an analyst at the Bank of Tokyo-Mitsubishi UFJ.
Earlier, Asian markets were under pressure following Wednesday's big reverse on Wall Street. Hong Kong's Hang Seng index fell 1% to 19,595.10, but China's main index in Shanghai rose 1.3% to 2,703.90. Japan's Nikkei 225 index slipped 0.6% to close at 8,981.94 as a strengthening yen, clobbered Japan's crucial export sector.