European shares fell sharply in early deals on Friday to touch their lowest level in eight weeks as fresh concerns over the stability of Deutsche Bank hit banking stocks.
By 07:23 GMT, the pan-European STOXX 600 index was down 1.6 percent, having touched its lowest level since early August, as the STOXX Europe Banks index fell 3 percent, the biggest sectorial faller. No sector was in positive territory.
Deutsche Bank fell nearly nine percent to below 10 euros for the first time ever after Bloomberg reported that some hedge funds that clear derivatives trades with the bank had withdrawn some excess cash, a sign that counterparties are wary of doing business with it.
Traditional Frankfurt rival Commerzbank was pulled down with Deutsche, losing 7.3 percent to trade at 5.38 euros.
Shares in Deutsche Bank had lost seven percent in New York on Thursday before trading on Wall Street ended, while markets in Hong Kong and Tokyo lost ground at open on Friday morning over worries for Deutsche's future.
In a statement on Friday, Deutsche reiterated its trading clients remained largely supportive.
Bloomberg News reported on Thursday that about 10 hedge funds that clear trades with Deutsche Bank withdrew some excess cash and derivatives holdings and moved the assets to other firms this week, citing an internal bank document.
AFP sources knowledgeable of the situation confirmed that 10 hedge funds had pulled funds out, including Millennium Partners, Capula Investment, and British fund Rokos Capital Management.
Bloomberg said that the "vast majority" of the bank's clients have made no changes to their exposure at the bank, a position echoed by Deutsche itself when it insisted that some 800 remaining customers trusted in its "stable financial position".
Shares in Deutsche Bank have been falling since Monday as investors react to a $14-billion fine demand from the US Department of Justice (DoJ) and conflicting reports in German media over whether Berlin would come to the troubled bank's aid if necessary.
Among the few gainers, Osram rose one percent after German daily Handelsblatt reported that several Chinese companies were interested in buying the lighting company.
