Fresh Turmoil For FTSE As Shares Slip Again

Stock markets have been hit by renewed volatility with Europe's banking giants adding to falls that have seen them lose billions in value so far this year.

Germany's Deutsche Bank (Other OTC: DBAGF - news) was in the eye of the storm as shares continued to slide despite an attempt to reassure investors and staff by the bank's chief executive - and an insistence by German finance minister Wolfgang Schaeuble that he had no concerns about the lender.

In London, the FTSE 100 (NasdaqGS: Z - news) opened higher after a sharp dip on Monday but was soon back in the red and ended 1%, or 57 points down at 5632 - its lowest close since the summer of 2012.

Markets in Paris and Frankfurt also fell, taking their cue from a rout in Japan overnight, where the Nikkei lost more than 5% of its value in a horror show of a trading day that saw a rush for safe havens such as gold and the yen.

However on Wall Street, stocks fought back from early declines to finish only slightly lower.

Stocks have seen a turbulent start to February, offering no respite from a stormy January which saw the plunging oil price and fears about global growth spook investors.

In London, it was the beleaguered miners - who have endured a torrid few months on fears over China's growth slowdown - and banking stocks that endured the most pain.

Laith Khalaf, senior analyst at Hargreaves Lansdown (Other OTC: HRGLF - news) stockbrokers, said "The Footsie is now wallowing at the level it stood at in 2012, with the usual suspects in the mining sector dragging the index down, after they survived Monday's sell-off unscathed.

"There's no doubt that confidence has been shaken, but the upshot is investors are seizing opportunities and buying more shares when stock prices are lower."

Banks have been particularly badly hit worldwide in recent weeks as investors fret on several fronts.

:: Why Banking Stocks Are Taking A Bashing

The worries include loans, particularly those to the commodity sector, turning sour as the world economy stutters.

Germany's biggest lender, Deutsche Bank, issued a statement on Tuesday saying it was "rock solid" in a bid to reassure investors that it has sufficient cash to pay its riskiest debts but said staff should expect further cost-cutting.

Its share price has plunged almost 40% since the beginning of 2016. The statement by chief executive John Cryan failed to stop the rot with the stock down 4% in the latest session.

Some banks in Italy and Greece have fared even worse as they continue to struggle in the aftermath of the financial crisis.

Trading in shares of Italy's biggest bank by assets, Unicredit (EUREX: DE000A163206.EX - news) , were suspended on Tuesday after their value declined by 6% within hours.

RBS (LSE: RBS.L - news) and Barclays (LSE: BARC.L - news) have lost nearly a quarter of their respective values during 2016 so far.

The worldwide market turmoil this year has been partly attributed by some market analysts to the end of the US Federal Reserve's quantitative easing programme and its decision to raise interest rates - arguing a correction in values was perhaps overdue as investors got to grips with the end of the era of cheap money.

But while the Fed saw a sufficient recovery in the US economy, the rest of the world is more exposed to the slowdown in emerging markets and subsequent commodity price collapse - aided by the record glut in oil.

The Bank of Japan introduced a negative interest rate for commercial banks to park money with it only 10 days ago in a bid to get them lending and stoke stubbornly low inflation.

The European Central Bank and others have also adopted similar policies - eating into the profitability of bank loans.

Meanwhile the oil price fell again in the latest session after a new report from the International Energy Agency indicating that the global glut in supply would worsen this year.

The price of a barrel of Brent crude dipped below $31 though was still ahead of lows seen in January when it had plunged close to $27.