Royal Bank of Scotland leads banks lower

European equities markets were lower Tuesday as banks fell on concerns that they have too much exposure to Dubai’s debt problems.

The FTSE 100 was 1.65 percent lower to 5,223.13 in London, while the FTSE 250 dropped 1.54 percent to 9,031.76.

Royal Bank of Scotland (LSE: RBS) was the biggest loser on the 100 and in the banking sector after a broker reduced its recommendation from “reduce” to “sell” and on concerns that its board of directors will quit if the UK government imposes a windfall tax on bonuses.

RBS was down 7.73 percent, while the only London bank to see gains was Lloyds Banking Group (LSE: LLOY), which only added 0.15 percent.

All constituents in the mining sector fell as metals prices declined, led by Gem Diamonds (LSE: GEMD), which was down 5.88 percent on the 250, while Lonmin (LSE: LMI) dropped 3.89 percent on the 100.

Video game retailer Game Group (LSE: GMG) saw the biggest decline in London as it fell 19.5 percent, while most of the energy sector was lower, led by a 12.26 percent drop from oil and gas explorer Melrose Resources (LSE: MRS).

The biggest gain in London on the session came from the pharmaceuticals sector, where Vectura Group (LSE: VEC) added 4.71 percent to lead the 250, while the best performer on the 100 was publisher “earson (LSE: PSON), which gained 1.05 percent.

The FTSE Eurofirst 300 was 1.52 percent lower to 1,005.06 while the CAC-40 fell 1.43 percent to 3,785.3, the Dax was 1.66 percent lower to 5,688.58 and the IBEX dropped 1.69 percent to 11,808.9

Most markets in the Asia-Pacific region were also lower in reaction to US Federal Reserve chairman Ben Bernanke‘s comments on Monday which indicated that US economic recovery will be slow, although the Straits Times Index added 0.3 percent to 2,805.5 and India’s Sensex was up 1.44 percent to 17,227.68.

Tokyo’s Nikkei 225 was 0.27 percent higher to 10,140.47 and the Topix index fell 0.25 percent to 896.7, but the Mothers market of small and mid-caps added 0.38 percent to 405.68.

A stronger yen versus the US dollar hurt exporters in Tokyo, while shippers were lower on falling cargo rates for commodities.

Mitsui OSK (TYO: 9104) was down 3.3 percent while Kawasaki Kisen Kaisha (TYO: 9107) fell 5.4 percent and Nippon Yusen K.K. (TYO: 9101) dropped 5.7 percent.

Elsewhere in the region, Taiwan’s Taiex was down 0.09 percent to 7,768.78, while in Australia the S&P/ASX200 fell 0.13 percent to 4,670.6 and the Sydney Ordinaries dropped 0.19 percent to 4,686.4.

South Korea’s Kospi was 0.3 percent lower to 1,627.78, the Shanghai Composite was down 1.06 percent to 3,296.66 and the Hang Seng dropped 1.18 percent to 22,060.52 in Hong Kong.

New York markets were lower at midday, with the Dow Jones Industrial Average down 0.93 percent to 10,293.07 at just before 1 p.m. while at the same time the Nasdaq Composite was 0.37 percent lower to 2,181.45 and the S&P 500 had dropped 0.84 percent to 1,093.99.

Crude oil and metals prices were lower in midday trade in New York.

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