Europe open: Banks and energy shares pace the decline

European stocks took a battering in early trade, with banks and energy issues pacing the decline, as oil prices slid.

At 0900 GMT, the benchmark Stoxx Europe 600 index was down 3.6%, Germany’s DAX was off 2.8% and France’s CAC 40 was 2.8% weaker.

“European markets have fallen sharply in early trading tracking Asian markets lower following the late sell off on Wall St as yesterday's brief respite proves to be short-lived,” said Andy McLevey, head of dealing at stockbroker Interactive Investor.

“Nervous investors are once again heading for less risky 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.”

Investors were still digesting comments from Federal Reserve chair Janet Yellen on Wednesday, who said turbulence in financial markets had impacted global growth prospects.

“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 in early trade, with the Stoxx 600 oil and gas index down 3.4% as oil prices lost ground. West Texas Intermediate was down 3% at $26.62 a barrel while Brent crude was 1.8% lower at $30.28.

Banks suffered the brunt of the losses, however, with the sub-index for the sector 5.6% weaker.

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

Meanwhile, miners were the standout losers in London, with Rio Tinto, Glencore and BHP Billiton all sharply lower.

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.