European stocks in red led by bank shares

European stock markets were in a negative territory Friday due to concerns about trade tensions between the US and China, as well as uncertainties in the US banking and financial sectors.

The pan-European Stoxx Europe 600 index fell 1.54%, or 8.69 points, to close at 562.91 as of 0745GMT, the banks index fell 2.7%.

Germany's DAX 40 was down 2.11% to 23,759.79 points, while the UK's FTSE 100 index lost 1.52% to 9,292.5.

France's CAC 40 index dropped 0.9% to 8,115.27 points and Italy’s FTSE MIB 30 fell 2% to 41,530.84.

The ongoing US government shutdown due to budget disputes is causing continued uncertainty in global markets.

In addition to the shutdown uncertainty, regional banks Zions Bancorp and Western Alliance have announced that they encountered fraud in some of their loans, raising concerns about the banks' loan portfolios.

The sell-off led by banking and financial sector stocks has also impacted investors' risk perception. The VIX, known as the "fear index" in markets and reflecting volatility in the S&P 500 Index, rose to 25.31, its highest level in nearly six months.

This risk sentiment also spilled over into European markets on the new trading day causing a sell-off in banking stocks across the region.

Shares of Germany's Deutsche Bank were trading down 5.6%, Britain's Barclays fell 4.9%,Standard Chartered dropped 4.6%, France's BNP Paribas decreased 3.3%, the Dutch ING Groep were down 3%, France's Societe Generale slid 3.8%.