Banks drive European stocks to 3-year low

European stocks fell to their lowest level in three years early on Tuesday with banks heading the decline amid intense concerns over the fate of the sector.
By 0710 GMT, the FTSEurofirst 300 index of top European shares shed 1.3% to 1,119.17, their lowest level since July 2005.
European banks were the sharpest decliner with the DJ Stoxx European banking index shedding 2.3%. Deutsche Bank fell 2.8%, RBS lost 3.4% and UBS dropped 3.5%.
"The conditions are foul and it is possible that the downwards spiral continues if a possible run on banks in the U.S. intensifies," said Stefan de Schutter, an asset manager at Alpha Trading in Frankfurt.
France's Natixis tumbled 7% after Citigroup cut the target price on the stock by 16% and reiterated its "sell" rating, pointing to an increased possibility of a dilutive rights issue.
Among gainers, M&A activity lent some support with Continental AG rallying 5% amid newspaper reports that Schaeffler has secured a 30% stake in the German automotive supplier.