European stock markets dropped on Monday as the banking sector shares declined sharply after the deal to consolidate the two rival Swiss lenders, UBS and Credit Suisse.

Swiss banking giant UBS on Sunday announced the takeover of troubled lender Credit Suisse for around 3 billion Swiss francs ($3.25 billion) with the backing of Swiss authorities to ease the turmoil in the global banking system and restore confidence in the financial markets.

UBS shares plunged around 13.5% as of 0845GMT after the purchase of the 167-year-old bank for less than it was worth.

STOXX Europe 600 index declined 0.32% to 434.92 points at 0939GMT.

The UK's FTSE 100 index fell 0.33% to 7,310.90 points and Germany's DAX index decreased 0.22% to 14,735.55 points.

France's CAC 40 index was down by 0.07% to 6,920.61 points and Italy's FTSE MIB dropped 30.43% to 25,384 points.

Source: Anadolu Agency