European Stocks Plummet as Banks and Oil Prices Weigh Heavily

European stocks hit three-month lows on Tuesday, weighed down by banks and rising oil prices. The pan-European STOXX 600 index fell 0.8% to 630.99 points, its lowest since June 12.

Banks and financial services stocks were among the biggest decliners, with UBS falling 4.2%, Deutsche Bank dipping 1.2%, UniCredit down 2.3%, and Standard Chartered slipping 2.1%. The warning from Bank of America CEO Brian Moynihan that investment banking fees could drop by at least 10% in the third quarter triggered worries about bank earnings.

The European Central Bank raised interest rates for the second time last week, and markets are now focused on the US Federal Reserve's decision on Wednesday. Traders expect a rate hike, with over 90% chance of an increase according to LSEG data.