European equities swooned to a four-week low on Tuesday as poor results from UBS and the break-up of UK banks, Royal Bank of Scotland and Lloyds Banking Group, reminded traders of the financial sector’s fragility.

Adding to the woes was the Australian central bank’s decision to raise interest rates by 25 basis points to 3.5 per cent. It was the second time in just over a month that the Reserve Bank of Australia had lifted rates and the move raised fears among investors that the period of ultra-loose global monetary policy was coming to an end.