European stocks fell amid continued selling of bank stocks

European stocks fell on Monday, as banking stocks continued to decline in the region, despite the intervention of the authorities to limit the repercussions of the sudden collapse of Silicon Valley Bank.

The pan-European Stoxx 600 index was down 0.6 percent by 0812 GMT, after closing at its lowest level in more than five weeks on Friday.

This comes as futures contracts rose on Wall Street after the Federal Reserve and the US Treasury announced a set of measures to stabilize the banking system, and said that depositors in Silicon Valley Bank will be able to access their deposits on Monday.

European banking stocks fell 1.1%, after witnessing the worst selling in more than five months over two days, amid concerns about the resilience of the sector’s balance sheet in the face of the collapse of Silicon Valley, in addition to expectations of raising interest rates.

Investors now see the odds of the Federal Reserve raising interest rates by 25 basis points next week as close to 90 percent, a drastic change from the 50 basis point hike they previously expected after strong economic data.

Goldman Sachs said on Sunday that it does not expect to raise interest rates in light of the recent pressures on the financial sector.

Meanwhile, the European Central Bank is set to raise interest rates by 50 basis points later this week.

HSBC fell 0.1 percent after the British bank said it had acquired a unit of Silicon Valley Bank in Britain for 1 pound ($1.21), which means saving a major bank for lending to British technology start-ups.

US authorities took emergency measures on Sunday to boost confidence in the banking system after the collapse of a Silicon Valley bank threatened to spark a wider financial crisis.