European equity market volatility hit an 18-month high this morning, as the share prices of French banks swung wildly back and forth amid unsubstantiated reports that one bank in Asia had cut credit lines to lenders in the country and that others were reviewing trades and counterparty risk.

Reuters reported this morning that one bank had cut credit lines to French lenders, while five other banks are reviewing trades and counterparty risks, according to Reuters, as sovereign fears led financial institutions to re-assess their counterparty risk. Reuters cited a mix of risk officers, senior traders and loan bankers.