Shares in BNP Paribas on Tuesday plummeted nine percent to €23.63 after a drop of 12 percent in an earlier session. The decrease followed allegations that the lender could be facing a possible credit rating downgrade.
Several French banks remain under pressure by markets amid worries over Greek debt exposure.
Stocks had opened higher in early trade Tuesday after it emerged that China's sovereign wealth fund is in talks with Italian officials to buy government bonds and investments in strategic corporations. Early gains offered a brief relief only however, as the FTSE 100 fell 0.8 percent to 5,086, while the French CAC 40 decreased 2.6 percent to 2,779, following BNP Paribas' share tumble.