European markets slump amid fresh debt fears

European markets slumped deep into the red Monday as renewed fears over the continent''s debt crisis added to concerns over a potential multibillion-pound US lawsuit launched against Britain''s banks. Taxpayer-backed Royal Bank of Scotland fell more than 10% after it was singled out by a broker as the most vulnerable British target of claims made by the US Federal Housing Finance Agency (FHFA) over the subprime mortgage scandal,reported the Independent newspaper. Barclays and HSBC, who joined RBS on the list of 17 banks, fell 6% and 3% respectively, while Lloyds Banking Group, damaged by weakened sentiment, fell 6%. The wider FTSE 100 Index fell more than 2% as losses were compounded as borrowing costs for Italy and Spain began to creep up again, signalling weakening confidence in the countries'' finances. Elsewhere, the reasserted concerns over the eurozone debt crisis saw Germany''s Dax and France''s Cac-40 both slide 4% while a national holiday in the US meant there was no direction from the other side of the Atlantic. The FHFA claims the banks misrepresented the quality of billions of dollars of home loans sold to America''s state-backed mortgage giants Fannie Mae and Freddie Mac. RBS sold 30.4 billion US dollars (?18.8 billion) of securities, Barclays sold 4.9 billion US dollars (?3 billion) and HSBC sold 6.2 billion US dollars (?2.8 billion), according to the regulator. The renewed fears over global growth saw traders plough into safe-haven asset gold, which was higher at 1892 US dollars an ounce.