European Stocks Fall Sharply as Debt Fears Hit Banks

European shares fell sharply on Monday amid renewed fears over the euro zone debt crisis and a warning from Deutsche Bank’s CEO on the outlook for banks.

Close-up of a pen on stock price chart

The DAX [.GDAXI 5268.42 -269.91 (-4.87%) ] led the losers, falling by over 5 percent, while stocks in London and Paris also fell sharply.

The biggest loser in Germany is Deutsche Bank [DB 36.27 -2.33 (-6.04%) ] after CEO Joseph Ackermann told a banking conference that the euro zone debt crisis could kill weak banks and stunt profits for the rest of industry for years to come.

You can tune in to CNBC TV for a Special, 2 1/2-Hour 'European Closing Bell' from 9:30 am ET to noon ET Monday on the European Market sell-off.

Stocks in Asia had tracked Wall Street’s Friday close which saw the Dow [.DJIA 11240.26 -253.31 (-2.2%) ] lose over 250 points following news that the world’s biggest economy created no jobs in August.

Once European stocks open losses intensified as investors fretted over the euro zone debt crisis and weaker-than-forecast services data from across the euro zone.

Main European Markets
.FTSE
5125.52
-166.51
-3.15%
568,402,215
.GDAXI
5268.45
-269.88
-4.87%
169,869,761
CAC40
3012.10
-136.43
-4.33%
145,608,986

Over the weekend a meeting of politicians, economists and business leaders on Lake Como outside of Milan saw Italy's austerity measures and possible changes to Silvio Berlusconi's 45 billion euro package take center stage.

Italian Economy Minister Giulio Tremonti used the meeting in Ambrosetti to repeat his call for a euro bond warning one is launch or "we will have critical problems."

The comments followed a warning by ECB president Jean-Claude Trichet that Italy must follow through on its austerity program, which was agreed with the ECB in return for the central banks support in the bond market.

It is “essential that the target that was announced to diminish the deficit will be fully confirmed and implemented".

Berlusconi's austerity program does not go far enough, according to Former UniCredit CEO Alessandro Profumo. Speaking in an interview with Italian daily Corriere della Sera Profumo warned that Italy needs an additional €400 billion in austerity measures to bring its debt-to-GDP ratio below 100 percent.

The ECB is expected to discuss the buying of Italian bonds at its meeting in Frankfurt this week.

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Current DateTime: 08:36:28 05 Sep 2011
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Ahead of an interview with CNBC on Monday, former German Chancellor Gerhard Schroeder told Der Spiegel that we need a "United States of Europe" to avoid further crisis, claiming governments will have to give up national sovereignty.

The comments came as Germany debated the breakdown in talks between the Greek government and officials from the EU, ECB and IMF [cnbc explains] on Friday.

Christian Lindner, deputy leader of Germany’s junior coalition partner Free Democrats, said “the breakdown of talks between the Troika and Greece is a blow to the stability of the euro [EUR=X 1.4096 -0.0068 (-0.48%) ]” and claimed Athens is shirking its responsibilities on austerity.

A German court will rule on the legality of the Greek bail-out packages on Wednesday.

A regional election over the weekend saw support for Angela Merkel's center right coalition fall sharply with the opposition Social Democrats soaring.

Greece's finance minister said on Sunday that the government was speeding up structural reforms and dismissed reports about a break down in relations between Athens and its international lenders.

On Friday the Greek government will learn how many private investors have signed up to its debt swap deal.