European banks tumbled for the third day in a row, led by Lloyds Banking Group and Commerzbank AG, on concerns that firms will struggle to fund themselves and increase earnings as the region’s sovereign debt crisis strangles economic growth. Basically, it’s a case of just about everything taking on for the team.

Lloyds fell over nine percent in early London trading, France was down three percent, Italy was off nearly three percent and even Germany was having a tough time, down about three and a half percent.

If things continue the way they are today, with American markets yet to open, we may see gold top another record high and break the $1 900 barrier for the first time.

A few of the reasons for today’s turmoil include the fact that Bank of America will be cutting 3 500 jobs this quarter, according to an internal memo, with a further 6 500 to follow later in the year.

Another reason was the decision by Hewlett-Packard to move away from the consumer market, killing its new tablet device and buying British software company Autonomy Corp for some $11.7 billion.

Deutsche Bank analyst, Matt Spick, explained what he thinks is happening:

The chances of a genuine liquidity crisis as experienced in 2008 are reasonably remote. [Lenders are] slower-moving, but [it’s] still [a] toxic, funding crisis. The weight of negative earnings momentum as we head into the second half represents a major ongoing risk for the European banks.

One thing we do know is that it will more than likely be a busy weekend of emergency telephone meetings for the decision makers.

[Sources: Bloomberg, Reuters via Yahoo]