FRANKFURT, Sept 22 ― European stocks posted their worst fall in three months yesterday as fears of a second wave of Covid-19 infections hit travel and leisure shares, while banks tumbled on a report about US$2 trillion (RM8.26 trillion) worth of suspect transfers by leading lenders.

There could be up to 50,000 new coronavirus cases per day in Britain by the middle of October if the pandemic continues at its current pace, the country's chief scientist adviser warned. On Sunday, health minister Matt Hancock said a second national lockdown was possible.

"We suspect equities would fall sharply and indiscriminately, similar to what happened in Feburary-March or in June ... if the rise in new cases in Europe seriously undermined the global economic recovery,” said Simona Gambarini, markets economist at Capital Economics.

London's FTSE 100 was the worst-hit blue chip index in Europe, falling about 3.4 per cent in its worst day in more than three months. UK-focused midcaps in the FTSE 250 dropped 4.0 per cent.

The pan-European STOXX 600 was down 3.2 per cent, a fall not matched since early June.

Europe's travel and leisure index fell 5.2 per cent, its worst two-day drop since April, with airlines such as British Airway-owner IAG plummeting 12.1 per cent and Lufthansa 9.5 per cent.

European banks slumped 5.7 per cent to hover near record lows after lenders including HSBC and Standard Chartered were named in a cache of leaked documents which said they had transferred large sums of suspect funds over the past two decades.

HSBC's shares in Hong Kong and Standard Chartered's in London fell yesterday to their lowest since at least 1998. Barclays and Deutsche Bank, which were also mentioned in the report, slipped 5.4 per cent and 8.8 per cent, respectively.

On Wall Street, the banking sector fell 4.2 per cent amid a broader market selloff.

Among other individual stocks, Britain's Rolls-Royce Holdings shed 10.8 per cent after the aero-engine maker said it was looking to raise up to £2.5 billion in an effort to strengthen its balance sheet.

German telecom 1&1 Drillisch plunged 27.8 per cent after warning that an increase in the cost of its network access deal with Telefonica Deutschland would hit profits this year. Its parent United Internet fell 26.1 per cent.

In the latest string of M&A activity, Play Communications soared 36.7 per cent after French telecoms group Iliad said it plans to acquire the Polish mobile phone operator in a €3.5 billion deal. Iliad slipped 3.0 per cent.

Lufthansa sank 9.5 per cent as it further cut its fleet and workforce due to the coronavirus crisis. ― Reuters