European stocks fell on October 8 as banking shares dropped to a three-month low. The STOXX 600 was down 0.9 percent at 624.24 by 0723 GMT.

Banking stocks fell about two percent, with Deutsche Bank, Santander, Societe Generale and UniCredit among the hardest hit. Investors fear that further US interest rate hikes will weigh on economic growth.

Euro zone government bond yields stayed near their peaks as a global bond selloff continued. Higher oil prices added to the gloom, with Brent crude up three percent on US-Iran tensions.

Minutes from the Federal Reserve showed officials divided over whether more rate hikes are needed. That uncertainty has rattled markets for weeks.

One bright spot was Bavarian Nordic, which rose 2.9 percent after raising its full-year guidance on strong vaccine shipments.

Currency markets were also under strain, with the euro slipping against the dollar as traders priced in more US rate hikes. Analysts said European banks face a double hit from weaker growth and falling bond prices.