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European bank stocks led declines across the region Wednesday amid a rally in global bond markets and a U.S.-led pullback in equity markets.

The Stoxx 600 Europe Banks index, the region's broadest sector benchmark, was marked 1.85% lower by 10:30 GMT, outpacing the 0.81% decline for the main Stoxx Europe 600

Societe Generale (SCGLY) , France's second-largest lender, was one of the biggest movers, falling more than 2.23% and leading declines on the benchmark CAC-40. In Germany, Deutsche Bank (DB) (-1.5%) and Commerzbank (CRZBY) (1.45%) were notable fallers while Credit Suisse (CS) led markets in Zurich lower with a 2.4% decline. 

The region's biggest mover, however, was ING Group NV (ING)  , which fell more than 5% Wednesday after it said it could face "significant" fines related to money laundering investigations in both Europe and the United States after the probes were made public in the Dutch media.

European bond markets were active amid the sell-off, with benchmark 10-year bunds falling more than 5 basis points to 0.41% -- still 2% lower than 10-year Treasury notes -- ahead of a sale of €3 billion in new paper the Deutsche Finanzagentur. 

The moves in bonds, which were mirrored around the region, are generally negative for bank profits as they reduce (or "flatten") the difference between short and long term interest rates, creating difficulty for lenders who borrow money for short periods of time in order to fund loans and investments with longer-term potential. 

That concern was underscored by comments from a key European Central Bank rate setter, Bank of France Governor Francois Villeroy de Galhau, who told a conference in Frankfurt that while he was "reasonably confident" that inflation would accelerate to the Bank's 'just below 2% target' and stay there by 2019, it was too early to change its low-rate, high liquidity policies.