Europe midday: Stocks turn lower amid growing worries about Deutsche Bank

At midday, the benchmark Stoxx Europe 600 index was down 0.4%, Germany’s DAX was 0.8% lower and France’s CAC 40 was off 0.5%.

At the same time, oil prices retreated after Iran played down expectations for a deal on oil production, calling the OPEC meeting on Wednesday “consultative” and dashing hopes that an agreement will be made. West Texas Intermediate was down 1.4% at $45.31 a barrel and Brent crude was off 1.4% at $46.67.

Mike van Dulken, head of research at Accendo Markets, said: “Equities have reversed a strong start and decent overnight bounce. This comes as initial relief that Donald made hard work of his first presidential debate against Hillary is eclipsed by, 1) intensifying fears about Deutsche Bank (and sector peers and Chancellor Merkel and the Eurozone); 2) the US government pondering how big a fine it can pin on VW without bankrupting it for dieselgate,and, 3) oil remaining volatile as we get snippets from the OPEC-led Algiers meeting.”

Deutsche Bank was under the cosh again as it reassured investors it has enough cash to pay the $14bn fine from the US Department of Justice for mis-sold mortgage-backed securities. On Monday, the stock tanked as Chancellor Angela Merkel ruled out any state aid for the bank, which then responded by saying it would solve its problems on its own.

Deutsche weighed on the broader sector, pushing the Stoxx 600 banks index down 1.1%.

Meanwhile, Volkswagen shares fell sharply following a report that the US Justice Department is assessing how big a fine it can extract from the beleaguered German car maker without putting it out of business.

Commerzbank dropped after a report in Handelsblatt suggesting it was planning to cut around 9,000 jobs over the coming years as part of its restructuring plan.

Legal & General was weaker as it said that following a strong third quarter, its retirement arm was on track to double new business sales in the full year, with customer demand for bulk annuities and lifetime mortgages seemingly unaffected by the introduction of Solvency II regulation, Brexit uncertainty or lower interest rates.

Plumbers merchant Wolseley slumped after announcing job cuts and store closures despite a rise in full-year profits.

On the upside, United Utilities edged higher after saying it expects revenue for the first half of this year to be slightly lower than the same period last year, but underlying operating profit to be marginally higher.

Electrolux gained after an upgrade by Nordea Bank, while Orange was boosted by an upgrade from Credit Suisse.