Shares in European and Asian financial stocks dropped on Friday due to concerns about mounting risks and credit quality, following a rout in U.S. regional banking shares. European banks fell 2.6% in early trade, led by Deutsche Bank and Barclays. Japanese banks and insurers also sank, with Tokio Marine and Mitsubishi UFJ Financial Group down nearly 3%. The U.S. regional banking index slumped 6% as two small banks disclosed separate issues. While analysts believe the issues are unlikely to pose systemic risks, they could weigh on near-term sentiment due to lax lending standards and fraud concerns. Other financial stocks in Asia, such as DBS Bank and QBE, were also under pressure. The recent bankruptcies of U.S. auto parts supplier First Brands and car dealership Tricolor have highlighted concerns about risk controls in the banking sector and the opaque credit market.

Read more at Yahoo Finance: Banking stocks tumble as US credit worries jolt investors