European Markets Fall As Investors Bank On More Financial Downturns

London, UK (AHN) - Banks led in a drop of European markets Wednesday as a continuation of housing concerns coupled with new evidence of an economic slowdown caused traders to act cautiously.

The pan-European Dow Jones Stoxx 600 shed 2 percent to 286 as a report was released showing industrial growth dropped during the third and second quarters. The report mirrored Commerce Department numbers indicating U.S. retail sales in July fell 0.1 percent while the price of imported goods rose.

The FTSE 100 fell 1.3 percent to 5,461, as London traders reacted to news from a Bank of England projection of possible zero economic growth in 2009. Elsewhere, the French CAC-40 dropped 1.9 percent and Germany's DAX 30 retreated 1.8 percent to 6,444.

As in Asia, banks weighed on European markets, falling 4 percent. The downturn followed word J.P. Morgan Chase lost $1.5 billion in July due to housing debts.

In Europe, the Royal Bank of Scotland Group lost 5.5 percent while British Barclay's shed 4.4 percent and Swiss banking giant UBS fell 5.5 percent.