Debt Crisis: Greek debt and French banks drive share sell-off
French banking stocks drove another sell-off on world markets today amid renewed fears that Greece would default on its debts.
Rumours of a credit rating downgrade for French banks intensified the sense of panic about the eurozone debt crisis. Shares in Societe Generale slumped 11pc, even though it said its exposure to the eurozone's troubled economies was diminishing.
French and Swiss banks have one of the highest exposures to Greek debt.
London's FTSE 100 Index closed down 1.6pc, or 85 points, at 5129.6, although it had dropped more than 2pc earlier in the day while the DAX in Germany and the CAC 40 in France were down more than 2pc and 4pc, respectively. .
Meanwhile, in the US, the Dow Jones Industrial Average dropped 0.5pc as European markets closed, amid fears that the eurozone debt crisis would help push the world's largest economy back into recession.
Fears that Greece will default on its debt were fuelled when the country's deputy prime minister said it could run out of money next month unless it meets the EU's bailout conditions.
This sparked a sell-off for banking stocks across much of Europe, although those in the UK were relatively resilient, despite the billion pound cost of the Independent Commission on Banking's proposals for a protective firewall for retail operations.
Traders' fears were heightened after a meeting of G7 leaders over the weekend failed to satisfy markets they could tackle the eurozone debt crisis or the slowdown in global economic growth.
Mining stocks bore the brunt of the selling as a result of concerns the eurozone crisis could hit global demand for metals.