European stocks have posted their worst fall in three months as fears of a second wave of Covid-19 infections hit travel and leisure shares, while banks tumbled on a report about $2 trillion worth of suspect transfers by leading lenders.

Shares in London were down 3.4% by the close of business, while the markets in Paris and Frankfurt were 3.7% and 4.4% weaker respectively. 

The Dublin market had dropped 3.6% by the end of the day, with Irish banking shares lower. 

Europe's travel and leisure index fell 5.2%, its worst drop since April with airlines such as Aer Lingus and British Airways owner IAG retreating 12.1% and Lufthansa by 9.5%.

Shares in Ryanair had dropped 5.1% in Dublin trade, while Dalata Hotel Group slumped 8.5%.

European bank shares fell over 5.7% following reports that banks such as HSBC and Standard Chartered were among those moving large sums of allegedly illicit funds over the past two decades.

HSBC's shares in Hong Kong and Standard Chartered's in London fell to their lowest since at least 1998 after media reports that they and other banks, including Barclays and Deutsche Bank, moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money. 

Barclays and Deutsche Bank, which were also mentioned in the reports, fell 5.4% and 8.8%, respectively.

A report from China's state-run Global Times also suggested that HSBC could be a possible candidate for inclusion in the country's "unreliable entity list" that targets foreign firms which violate Chinese laws or commit "illegal acts". 

Earlier in Asian trade, the Hang Seng index in Kong Kong slumped 504 points (2%) to finish at 23,950 on concerns about fresh coronavirus spikes that are forcing governments to reimpose economy-damaging containment measures. Markets in Tokyo are closed for the "Old Age Day" national holiday.

Meanwhile, Wall Street's main indexes slipped at the open today as concerns about fresh coronavirus-driven lockdowns and the inability of Congress to agree on more fiscal stimulus raised fears about another hit to the domestic economy.