Falling oil prices save shares from worse losses

European shares pared their losses in late trading on Tuesday as oil prices dropped substantially following negative comments on the US economy by Federal Reserve Chairman Ben Bernanke. However the indexes were still down nearly 2%.

Fresh worries over the health of the financial services sector hammered banks. Royal Bank of Scotland lost 7% of its value, Natixis almost 10% and Fortis fell 11% as the Dutch stock market regulator said it was looking into the company’s funding plan.

As one trader said “The sell-off is extremely violent, it’s a blood bath, that could last all summer.”

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