Europe midday: Stocks slide as banks and energy weigh, investors seek safe havens

European stocks took a battering on Thursday, with banks and energy issues pacing the decline, as oil prices slid and investors fled to safety.

At midday, the benchmark Stoxx Europe 600 index was down 3.2%, Germany’s DAX was off 2.4% and France’s CAC 40 was 3.4% weaker.

As the risk-off mood gripped markets, investors sought safe havens, pushing gold prices to a nine-month high. Spot gold was up 2.5% to $1,226.43 an ounce.

At the same time, the yield on the German Bund was down 0.08 of a percentage point to 0.168. Yields move inversely to prices.

“Nervous investors are once again heading for less riskier assets as concerns over the strength of the global recovery resurface and continued weakness in the price of oil. With no immediate end in sight the volatility of late is set to continue which may provide opportunity for brave investors however many may choose to sit on the sidelines until a little calm is restored,” said Andy McLevey, head of dealing at Interactive Investor.

Comments from Federal Reserve chair Janet Yellen, who said on Wednesday that turbulence in financial markets had impacted growth prospects, contributed to the downbeat tone.

“Financial conditions in the US have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar,” Yellen said.

Energy shares were getting hammered, with the Stoxx 600 oil and gas index down 3.4% as oil prices declined. West Texas Intermediate was down 3.6% at $26.46 a barrel while Brent crude was 1.3% lower at $30.45.

Banks suffered the brunt of the losses, however, with the sub-index for the sector 5.5% weaker amid worries over whether they will be able to cope with low interest rates, which make it more difficult for banks to make a profit on their lending.

France’s Societe Generale led the fall, tumbling 12% after it reported a smaller-than-expected rise in fourth quarter net profit and warned that it might miss its profit target this year.

Deutsche Bank was under pressure again, with shares down 7% while prices for credit default swaps – which offer protection against the risk of a bond defaulting – rose, amid growing concern about the bank’s credit.

Meanwhile, miners were the standout losers on the FTSE 100, with Rio Tinto, Glencore and BHP Billiton all suffering heavy losses.

Glencore said on Thursday that it has agreed a $500m gold and silver steaming deal from its Antapaccay mine in Peru to help ease its balance sheet woe.

Rio Tinto reported a 27% drop in consolidated sales revenues to $34.8bn and a 52% decline in underlying earnings to $4.5bn in its full year results.

Elsewhere, Zurich Insurance was under the cosh after it posted a bigger-than-expected loss and warned over its 2016 targets.

Finland’s Nokia slid following the release of its fourth quarter results, as sales missed analysts’ expectations.

Shares in oil and gas major Total dropped despite its fourth quarter numbers beating expectations.

French corporate and investment bank Natixis bucked the trend after agreeing to buy a majority stake in independent adviser Peter J Solomon.

Adidas was also in the black as its 2015 results beat expectations and the company lifted its outlook.

Still to come on the data front, investors will eye the release of US initial jobless claims at 1330 GMT.