European stocks fell on Monday as bank stocks continued to tumble in the region even as authorities stepped in to cap the fallout from the sudden collapse of Silicon Valley Bank (SVB).
The pan-European STOXX 600 index (.STOXX) fell 0.6% by 0812 GMT, having closed at a more-than-five-week low on Friday.
However, Wall Street futures rallied after the Federal Reserve and U.S. Treasury announced a range of measures to stabilise the banking system and said depositors at SVB would have access to their deposits on Monday.
European banking stocks (.SX7P) dropped 1.1%, after their worst two-day selloff in more than five months, on worries about the resilience of the sector's balance sheet in the face of SVB's collapse and the interest rate outlook.
Investors now see a nearly 90% chance that the Fed will hike interest rates by 25 basis points (bps) next week, a drastic change from the 50-bps hike they had priced in previously following strong economic data.
Meanwhile, the European Central Bank is set to hike rates by 50 bps later this week.
HSBC (HSBA.L) slipped 0.1% after the British bank said it is acquiring the UK subsidiary of SVB for 1 pound, rescuing a key lender for technology start-ups in Britain.
