Banks lead Europe to the worst week in three months

A tumble in Deutsche Bank AG spread to the industry, deepening a selloff that dragged European equities to their biggest weekly plunges since before the U.K. secession vote.

Shares of the German lender sank 8.5 percent, the most since the aftermath of the British referendum, after rebuffing the $14 billion claim from the U.S. Justice Department to settle a probe. Royal Bank of Scotland Group Plc and Credit Suisse Group AG also fell more than 4 percent, along with some Italian and Portuguese firms. That highlighted the vulnerability of the recent rebound, with a gauge tracking the region’s lenders down 5.6 percent this week, erasing about a third of its gain from the past two months.

The Stoxx Europe 600 Index fell 0.7 percent to a six-week low, down for a sixth time in seven days. Concerns about lenders and worries that the region’s central bank may balk at adding stimulus have sent the gauge to its first backto-back declines since June and down 2.2 percent in the past five days. A record streak of withdrawals from the region’s funds continued into a 32nd week, a Bank of America Corp. report showed.

While European Central Bank President Mario Draghi downplayed the need for more aid last week, his unprecedented stimulus has raised concerns about lenders’ profitability.

The MSCI Asia Pacific Index rose 0.6 percent to 137.35 as of 3:44 p.m. in Tokyo, halting a sixday run of declines and paring this week’s loss to 2.1 percent. Reports Thursday showed U.S. industrial production contracted more than forecast, while retail sales unexpectedly slid, sending the odds for a rate increase from the Federal Reserve next week to less than 20 percent. About $2 trillion was erased from the value of global equity markets in the past week amid concern central banks are reluctant to boost stimulus even as the global economy sputters.