Banks drag on Europe; oil falls after Iran sanctions lifted

European shares fell on Monday, following Asia lower and led by banks after the European Central Bank said it would quiz euro zone lenders about high levels of bad loans, while oil prices tumbled on the prospect of more supply from Iran.


With U.S. markets closed for the Martin Luther King Day holiday, U.S. stock index futures slipped 0.3 percent SPc1.


European shares opened higher but any prospect of a rally after stocks hit their lowest since December 2014 on Friday quickly fizzled out.


The pan-European FTSEurofirst 300 index .FTEU3, which has lost more than 10 percent this year, dropped a further 0.2 percent, with an index of euro zone banks .SX7E down 3.3 percent.


An ECB spokesman said on Sunday a number of banks would be asked about high levels of non-performing loans. The burden of such loans, particularly in Greece, Portugal, Spain and Italy, is curbing the euro zone’s economic recovery by limiting banks’ ability to lend.


Portuguese stocks .PSI20 were down 3.4 percent and Italy .FTMIB lost 2.3 percent


“The uncertainty in the market, be it in Europe or wherever else, is causing these banks to suffer,” Mark Foulds, sales trader at ETX Capital, said, adding that the sector was also under pressure from recent volatility linked to China.


Read More: Banks drag on Europe; oil falls after Iran sanctions lifted | Reuters