European stocks fall on political uncertainty

European stock futures fell amid concerns over economic and political turmoil in the UK and as the challenges facing Credit Suisse Group AG weighed on sentiment.

December contracts on the Euro Stoxx 50 Index fell by as much as 2.4% in Asian morning trading hours and the FTSE 100 futures declined as much as 1.8% before both pared losses. Volumes were not large due to holidays in China, South Korea and Sydney.

The political turmoil in the UK has added to the headwinds for Europe investors who are already grappling with the fallout of Russia's war in Ukraine as well as global concerns related to inflation and higher rates. The pound hit a new record low against the dollar last week, while British and European stocks have tanked.

Despite the market upheaval, the UK prime minister Liz Truss said over the weekend that her government is sticking to a plan to remove the highest income tax rate. Russia's state-controlled Gazprom PJSC suspended natural gas deliveries to Italy, escalating the energy crisis in Europe.

The market reads it that way, and there is a sense that the Bank of England will clamp down in the UK, said Ilya Spivak, head of greater Asia at DailyFX. It looks like a lot of tightening has entered the equation. Investors are watching developments surrounding Credit Suisse.

Ulrich Koerner, the new Chief Executive of Credit Suisse, wanted to boost employee and investor confidence in the bank after the cost of insuring its bonds against default went up about 15% last week to levels not seen since 2009 and its shares touched a new record low on Friday.

Koerner, who was named CEO in late July, has had to deal with market speculation, banker exits and capital doubts as he seeks to set a path forward for the troubled Swiss bank. Analysts at KBW estimated that the firm may need to raise 4 billion Swiss francs $4 billion of capital even after selling some assets to fund any restructuring, growth efforts and any unknowns.

According to Hebe Chen, an analyst at IG Markets Ltd., the issue is getting into the unknown depth because of the size of the debt and rising rates. Investors are losing faith in the ability of top leadership to stabilize the markets, she said.