European shares fell today, tracking Wall Street's weakness on rumours of large hedge fund losses.
By 8:25am, the FTSEurofirst 300 index index was 0.2 per cent lower at 1,071.8 points, adding to two days of losses hit by weaker-than-expected results.
US stocks fell sharply last night on unconfirmed rumorus about potentially large hedge fund losses.
The panic selling was triggered by rumours that hedge funds had suffered large losses tied to the debt of General Motors. Shares of investment banks with connections to hedge funds fell sharply, even though the rumors could not be substantiated
Last week, credit rating agency Standard and Poor's downgraded the debt issued by General Motors and Ford to "junk" status.
The US-listed stock of Deutsche Bank slid 3.3 per cent to $79.58 on speculation about investment banking losses, possibly in connection with a hedge fund.
The Dow Jones industrial average slid 103.23 points, or 0.99 per cent, to close at 10,281.11.
"Regardless of what the (hedge fund) rumours are, today highlights the risks inherent in this market where a lot of money was made because of the easy money the Federal Reserve provided," said Peter Boockvar, equity strategist at Miller Tabak & Co.
"Now the Fed is raising rates - this is the unwinding of a lot of the credit excess the Fed created," Mr Boockvar said. "Rumours like this are just the beginning."