(MENAFN- AFP) A report that a handful of hedge funds have withdrawn money and cut their positions at Deutsche Bank on worries about its financial condition sent Wall Street stocks tumbling Thursday.
About 10 hedge funds have cut their exposure to the German bank, moving some "excess" cash and derivatives holdings to other firms this week, according to an internal bank document seen by Bloomberg News.
Bloomberg said the "vast majority" of the bank's clients have made no changes, but the report sent Deutsche Bank shares sinking and pulled down the overall market.
Near 1745 GMT, the Dow Jones Industrial Average was down 1.1 percent to 18,145.57, while the broad-based S&P 500 dropped 1.0 percent to 2,150.32. The tech-rich Nasdaq Composite Index shed 1.0 percent to 5,268.18.
Deutsche Bank shares in Frankfurt were at 10.20 euros ($11.44), down 6.0 percent, while New York-traded shares for the bank were down 6.7 percent at $11.48.
The report comes as the US Department of Justice presses the German bank for a $14 billion penalty over its sale of mortgage-backed securities prior to the 2008 financial crisis.
Such a payout, analysts fear, could undermine the bank's capital foundations, already weakened in the European crisis.
Markets have been rife with talk that the bank could require a German government bailout, but Berlin and the bank have repeatedly rejected such speculation.
"The government is not preparing rescue plans. There are no grounds for such speculation," the finance ministry said Wednesday.
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