Fed tries to allay fears in banking space, in vain

The mayhem in the financial space, and lack of faith in the policy makers to avert a renewed slowdown has triggered a rout in banking stocks. What more, the European markets are almost nearing a two-year low.

The US federal reserve stepped in today to dismiss some of the concerns surrounding European banks. Top officials said the Fed was treating foreign banks on the same parameters are their US peers, reports CNBC-TV18.

The clarification, however, did little to stem the sell-off in the banking stocks.

The KBW bank index fell 5.6%, with Citigroup Inc off 7.2% at USD 27.66, and Morgan Stanley down 6.8% at USD 15.84. Only a handful of the S&P 500 components were in positive territory.