(Citigroup and other stock prices brought current in this update.)
NEW YORK (
was among several financial stocks trading sharply lower Tuesday amid rising financial and geopolitical tensions.
and other global financial stocks sank as North Korea has threatened to retaliate against South Korea with military action and a report that eurozone countries will be forced to impose a tax to cover future bank failures.
EU countries will be forced to impose an upfront levy on banks, with the proceeds to be paid into national funds to insure against future financial failures,
The Financial Times
reports. The proposals, expected to be unveiled Wednesday, is designed to prevent future bank failures from destabilizing the broader financial system and could raise billions once implemented, the
Meanwhile, several news agencies reported that North Korea will sever all relations with South Korea and has threatened military action after the alleged trespassing into its waters. Asian markets tumbled on the tensions between North and South Korea.
Citigroup shares traded as low as $3.56 earlier in the session and were lately down 2.4% to $3.69. More than 617 million shares changed hands by 1:20 p.m. ET, close to the three-month average daily share volume of 780 million.
Among other U.S. financial stocks,
Bank of America
lost 2.4% to $15.03,
slid 2.1% to $28.11,
gave back 1.4% to $25.38, and
was down 1.2% to $38.15.
On the other hand,
shares rose 2% to $139.43.
Rochdale Securities analyst Dick Bove wrote in a research note Tuesday that value is being created in bank stocks by investor panic.
"If the economy improves so that loan losses fall, the revenues are there to drive bank profits and stock prices higher," Bove wrote. "There is a panic in the markets at present. This is creating solid buys in bank stocks."
European bank stocks were hit hard Tuesday. Shares of
Allied Irish Banks
trading in New York dropped 7.6% to $2.32,
Bank of Ireland
lost 7.3% to $4.70,
Lloyds Banking Group
slid 7.3% to $2.93, and
National Bank of Greece
fell 7.2% to $2.44.
Citigroup Sell Citigroup!: Against the Grain
The fall in overseas bank stocks came as an agreement between
Spanish regional banks
Caja de Ahorros de Mediterraneo
Caja de Extremadura
was announced to create a joint banking group that seeks to "strengthen solvency and assets of the participating banks," the banks said in a statement.
The four banks said they would remain separate entities but would merge their risk policies, treasury operations, credit evaluation, internal controls and regulatory requirements,
said its previously approved reverse stock split will take effect on June 2.
shareholders approved a 1-for-10 reverse stock split at their annual meeting on May 13.
E*Trade shares were down 4.1% to $1.40.
shares tacked on 0.1% to $60.64 after Keefe Bruyette & Woods analysts upgraded the stock to outperform from market perform with a price target of $72. The firm cited the recent pullback in shares, saying that a stronger premium is warranted.
Most other U.S. financial stocks, though, were trading lower.
( ABK) dropped 7.9% to 87 cents,
The PMI Group
( PMI) fell 5.8% to $3.62,
( FNM) was down 3.8% to 90 cents, and
American International Group
lost 3.5% to $33.33
-- Written by Robert Holmes in Boston
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