France jitters pound EU banks

US-listed shares of European banks sank on Wednesday on worries about trouble in the French bank sector and talk that France's top-notch credit rating may be at risk. The BNY Mellon index of leading American Depositary Receipts (ADRs) tumbled 5.2 per cent, underperforming the benchmark Standard and Poor's 500 index, which ended down 4.4 per cent. The Dow Jones industrial average lost more than 500 points to end down 4.6 per cent. Click here to see the debt crisis in Spain and Italy The ADR index has lost 15.7 per cent since the start of the month, pressured by ever-growing worries about Europe's debt problems, which have hit shares of banks seen most exposed to the crisis. Article continues below ADRs "tend to be a little more economically sensitive than a benchmark", said Bryant Evans, investment adviser and portfolio manager at Cozad Asset Management, in Champaign, Illinois. The company runs the Cozad Asset Management International Equity Income Fund, which is made up of ADRs. Weaker-than-expected US economic data also has raised concern about another recession and kept investors out of risky assets. Societe Generale denied a series of rumours related to its financial health which, along with speculation on France's debt rating, caused its shares to plummet as much as 23 per cent in European trading on Wednesday. The CEO of Societe Generale told CNBC the rumours about France's sovereign credit rating downgrade are "very strange". He called the rumours about Societe General's financial health "absolute rubbish". US stock indexes had pulled off the session lows in early afternoon trading. Trigger factor But fear regained the upper hand and Wall Street's sell-off accelerated after the CNBC interview with Societe Generale's CEO, which was broadcast late in the New York afternoon with about half an hour left in the regular trading session. President Nicolas Sarkozy has ordered his finance and budget ministers to come up with new steps to deal with France's public deficit. Talk circulated in the market that the country's triple-A rating could be cut. However, credit rating agencies Fitch Ratings and Moody's Investors Service both reiterated France's AAA sovereign rating, a day after Standard & Poor's had done the same. Evans said that, despite the fall in European banks' share prices, he doesn't see "a collapse" in the banking industry. Instead, he sees buying opportunities in the sector, including the Bank of Montreal, whose shares were down 2.6 per cent at $57.21. Investors "can still take advantage of ‘for sale' prices by going on the fringes a little bit," Evans said. Among the worst performers of the European banks: Deutsche Bank, down 11.6 per cent at $40.36; Barclays, down 11.3 per cent at $10.61; Banco Santander, down 9.5 per cent at $8.31, and ING Group, down 9.9 per cent at $8.13. On the ‘pink sheets', Societe Generale was down 14 per cent at $6.46, while BNP Paribas was down 11 per cent at $25.10. Shares of Societe Generale fell 22.5 per cent at one point to a session low before regaining a little ground to end down about 15 per cent.