European shares drifted lower on Monday, trailing losses in Asia, as Turkey’s economic crisis sparked a sell off in Turkey-exposed banks in Europe and other stocks as investors triggered risk-off mode.
Euro STOXX 600 tumbled 0.43 percent to 384.20, the lowest level in nearly three weeks, where euro area banks plummeted 1.3 percent to a six-week low.
Shares of banks BBVA, UniCredit and BNP Paribas, which are exposed to Turkey, fell 3.95 percent, 5.05 percent and 1.12 percent respectively.
Istanbul stock market key index BIST 100 recoiled 5.32 percent to 89,905.05, coming very close to Friday’s low of 88,598.12.
Turkey central bank vowed to provide liquidity and cut lira and foreign currency reserve requirements for Turkish banks.
However, the impact on the Turkish lira was short lived as it slumped 9.22 percent versus the U.S. dollar to 7.0360, few steps away from Friday’s record low of 7.13.
Turkey President Erdogan said the U.S. was trying to stab Turkey from the back, revealing that spreading false news about Turkey’s economy was “treason.”
U.S. President Donald Trump’s decided on Friday to double Turkey’s steel and aluminum tariffs, adding more panic.
The U.S. dollar is meanwhile trading 96.28 versus a basket of major currencies, the highest level in more than 13 months.
The euro recovered slightly to $1.1383 after plunging to a bottom of $1.1365
after reports that the ECB is concerned over the impact of a weak Turkish lira
on European banks.