Signs of calm and stability in banking stocks, which have tanked in the past week following the collapse of Silicon Valley Bank (SVB), soon paved way for renewed selling as Credit Suisse shares fell to record lows.
Reuters GraphicsThe STOXX 600 (.STOXX) index fell 1.67%, while Europe's broad FTSEurofirst 300 index (.FTEU3) fell 51.58 points, or 2.91%Investors rushed back into safe haven investments.
"The Credit Suisse share price is falling and government bonds are rallying on the back of that.
Markets are "spooked" by Credit Suisse headlines, said Richard McGuire, head of rates strategy at Rabobank in London.
"For today Credit Suisse is the dish of the day but we don't think this will be a longer lasting trend," he said.