Europe banks hit 11-yr low as recession fears mount

By Steve Slater

LONDON (Reuters) - Europe's banks lurched to an 11-year low on Thursday as a grim outlook from Credit Suisse and worries about Spanish bank exposure to Latin America added to mounting concern about the impact of probable recessions.

By 2 p.m. the DJ Stoxx European banking index was down 4.3 percent at 195.5 points, after falling to 194.2, its lowest level since 1997.

Banks exposed to emerging markets were hit by a more sobering view that growth there will not be able to withstand a global recession, analysts said.

Spain's Santander, Europe's second biggest bank, fell 9 percent and BBVA lost 6 percent amid heightened concern about risk across Latin America, where both banks have big operations. It follows Argentina's decision to nationalise its private pension system.

Shares in Asia-focused Standard Chartered and National Bank of Greece both tumbled 12 percent.

"Emerging markets growth expectations have to be adapted to a more sober reality," said Arturo de Frias, an analyst at Dresdner Kleinwort. There had been "clear signs of capitulation" by investors in Santander, Standard Chartered and NBG, even though each had strong fundamental prospects, he said.

Santander shares have slumped 17 percent this week and Standard Chartered and NBG are both down 21 percent.

Banks across the sector were hurt by a fall by their U.S. counterparts on Wednesday, details of a 1.3 billion Swiss franc (691 million pounds) quarterly loss by Credit Suisse and other factors.