European shares slid in early trade this morning as the rising number of financial institutions revealing credit-related problems hit bank stocks, while Nestle shares rose after upbeat earnings.
By 7.14am the FTSEurofirst 300 index of leading European shares was down 0.9 per cent at 1,481.23 points, having lost 1.2 per cent yesterday. The Dublin market was down 1.3 per cent at 8315.27 at 9.50am.
Shares in UBS, HSBC and Barclays were the three biggest negative weights on the index, dragging the DJStoxx index of European banks down by 1.5 per cent.
"It's quite clear (investors) are effectively leaving financials .. which makes a lot of sense," said Heino Ruland, a strategist at German brokerage Steubing.
Global equity markets fell as a US fund yesterday tried to stop clients withdrawing cash to avoid investments at a discount, while a Canadian trust could not find the funds it needed to repay outstanding asset-backed commercial paper.
Outside the banking sector, shares in Nestle, the world's largest food company, were the top weighted gainer on the FTSEurofirst, rising over 4 per cent after the company said it would beat its own growth forecasts and posted an 18.4 percent increase in first-half net profit, more than expected.
The world's largest food group also unveiled a 25 billion Swiss franc ($20.70 billion) share buyback programme over three years.
London's FTSE 100 index fell 1 per cent, while Frankfurt's DAX fell 0.9 per cent and Paris' CAC 40 shed 1.3 per cent.