LONDON: European shares fell in early trade on Tuesday, extending losses into a third session, with banks lower on escalating worries a Greek default will spark a banking crisis in Europe.
The STOXX Europe 600 Banking Index fell 2 percent.
Franco-Belgian Dexia fell 13.9 percent, after dropping more than 10 percent on Monday. Dexia has come under increasing market pressure over its exposure to Greece and a board meeting went on into the early hours of Tuesday in an effort to resolve its problems.
At 0706 GMT, the FTSEurofirst 300 index of top European shares was down 1.3 percent at 900.21 points, after falling 1.2 percent on Monday.
"What you're now beginning to see is they (investors) are now picking out the banks. Dexia is the weakest," said Justin Urquhart Stewart, director at Seven Investment Management.
"Politicians have to stand behind these banks -- whether you call it state support, nationalisation, you have to keep the financial system working otherwise we will end up with another credit crisis."
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