World stocks and oil fell on Thursday after Deutsche Bank announced big losses and gave a bleak outlook, while the euro ticked down before a euro zone interest rate decision.
Deutsche shares lost more than 6 percent at one point after the group posted a 5.7 billion euro ($7.43 billion) pre-tax loss for 2008 and predicted a bleak future for the global economy and the banking industry.
Spanish rival Santander fell 2.8 percent after its bad debts increased to over 2 percent of loans. Swiss Re wrote down 6 billion Swiss francs in toxic assets and posted a 2008 net loss of 1 billion, sending its shares down 18 percent.
The European Central Bank is expected to keep its main refinancing rate at 2.0 percent after four months of cuts, but financial markets are looking for signs of further steps it may take to shore up the region's economy.
"The market is looking forward. The ECB's comments have been relatively hawkish but clearly data point to the fact that the refinancing rate does have to come down. The market is pricing further rate cuts," said Altaz Dagha, economist at Bank of Scotland Treasury.
"(Today's news from banks) shows that there are still problems with the banking sector. It takes something like this to spark that fear again. It's far from over." MSCI world equity index fell 0.6 percent while the FTSEurofirst 300 index of leading European shares dropped 1.5 percent.
Emerging stocks slipped 0.3 percent and U.S. crude oil 0.15 percent to $40.24 a barrel.
EURO AND ECB
The euro fell 0.2 percent to $1.2835 and markets awaited policy comments from ECB President Jean-Claude Trichet.
"If Trichet's statement raises expectations of a cut bigger than 25 basis points in March then this could put pressure on euro/dollar," Commerzbank currency strategist Lutz Karpowitz said. "Any more news of trouble in eastern Europe could also depress the currency."
The euro came under pressure after Fitch Ratings downgraded Russia's sovereign rating on Wednesday, underscoring worries that a sharp downturn in eastern Europe could hit the euro zone's economy.
It was also hurt by a move by Kazakhstan's central bank to devalue the tenge currency by about 18 percent on Wednesday.
The dollar rose 0.1 percent against a basket of major currencies.
The March bund futures fell 22 ticks before around 11.5 billion euros' of debt supply and the ECB rate decision.
Having enjoyed a rally thanks to inflows of funds seeking safer investment, sovereign bonds are coming under pressure as governments have to issue more debt to finance their massive financial sector bailouts.
France will issue up to 7 billion euros of 10- and 30-year debt, while Spain will issue an estimated 4.5 billion euros of interest rate-sensitive short-dated paper just days after issuing a record 7 billion euros of new 10-year Bonos in a syndicated sale.
