The takeover of Credit Suisse by UBS, the largest bank in Switzerland, was meant to calm the growing concern across markets about the health of the financial sector. That anxiety persisted on Monday, with bank stocks falling and markets around the world fluctuating between gains and losses, as investors warily assessed the fallout from the hastily arranged deal on Sunday by Swiss regulators to rescue Credit Suisse from the brink of a disorderly bankruptcy.

Markets fell in Asia and European stocks dropped at the open before paring their losses. Futures in the United States were volatile, swinging from losses to gains.

The choppy trade follows relatively steep losses recorded on Friday, implying that the weekend’s moves to shore up banks — which in addition to the Credit Suisse takeover included a deal between major central banks to make dollar funding more readily available and an acquisition of parts of the collapsed Signature Bank in New York — have not put nerves at ease.

European markets opened lower, with banks in the spotlight. Shares of UBS fell about 5 per cent in Zurich, as the risks and complexity of absorbing Credit Suisse gave investors’ pause. An index tracking Europe’s biggest banks slipped about 2 per cent, amid a reassessment of the value of banks in general.

In Asia, markets closed with losses, with Tokyo’s Nikkei 225 down more than 1 per cent and Hong Kong’s Hang Seng down more than 2 per cent.

Stock futures for the S&P 500, which give investors the ability to bet on the index before the start of trading, were roughly flat, after posting losses in early trading. On Friday, the S&P 500 slid 1.1 per cent, its sharpest decline in a week.

India slump

The Sensex on Monday sank nearly 361 points and the Nifty fell below the 17000 mark at the start of what promises to be another volatile week as investors worried over the stress in the global banking sector.

Though the benchmark indices clawed back from their steep losses earlier during the day, lingering concerns over financial contagion are expected to keep stocks under pressure.

Market circles pointed out that Monday’s crash was also on account of the two-day US Fed meeting that commences Tuesday.

There are apprehensions that despite the crisis faced by the US banking sector, the Fed is likely to continue its rate hike albeit by a lesser margin of 25 basis points.

The takeover of UBS by Credit Suisse also pinned down the markets — as the investors were spooked by the plan to write-down $17 billion of additional tier-I (AT1) bonds of Credit Suisse.

The bumpy session saw the Sensex opening lower at 57773.55 and plunging around 905 points to hit 57084.91. It recovered some of the losses and closed at 57628.95.

NYTNS; with inputs from Mumbai Bureau