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European bank shares slide after Credit Suisse rescue

European share markets opened sharply lower and government bonds and gold rallied in a rush for safety as the emergency weekend rescue of banking heavyweight Credit Suisse left the financial system facing widespread uncertainty.

Sunday had seen the most dramatic intervention since the global financial crisis with UBS buying Credit Suisse for three billion francs ($A4.8 billion) in a shotgun wedding and the world's top central banks pledging daily dollar funding offerings.

Shocked European bank shares initially slumped more than five per cent as markets started trading.

Credit Suisse's own shares fell more than 63 per cent, those of its acquirer UBS dropped almost 13 per cent, while the broader European STOXX 600 fell 1.6 per cent before staging a modest recovery.

"Credit Suisse is our Lehman moment in Europe but we recognise that and we are not going to make the same mistake," said Close Brothers Asset Management chief investment officer Robert Alster of the speedy action by authorities at the weekend.

He said the European Central Bank, Bank of England and other central banks would be well aware "of the next gazelles in the chain that the lions will be hunting" - other large banks with investment banking arms such as Deutsche Bank, BNP in France or Barclays in the UK - and will step in with support if needed.

"There is a lot of firepower from the authorities to counter what is the steadily eroding loss of confidence," Alster said.

With investors seeking out traditional safe harbours Europe's government bonds rallied as the stock markets buckled.

Yields on triple A-rated German Bunds, which fall as bond prices rise, hit their lowest since mid-December at 1.951 per cent although there were signs of risk aversion too with the spread between riskier Italian debt and German debt, widening out to more than 200 bps again.

Safe-haven demand in the currency markets also lifted the Japanese yen another 0.75 per cent although there were no major moves from either the Swiss franc or the euro.