European Stocks Drop, Oil Slides as Clinton Rally Is Short Lived

European stocks fell for a third day as losses among carmakers, energy producers and banks damped a global rally fueled by Hillary Clinton’s performance in the first American presidential debate.

The MSCI All-Country World Index of shares erased an advance, weighed down by the prospect of U.S. fines for Volkswagen AG and Deutsche Bank AG. Crude oil declined after Iran ruled out an immediate agreement on an output freeze, while Saudi Arabian stocks slumped on concern austerity will lower consumer spending. German bunds led gains in European government bonds and Finland’s 10-year yield dropped below zero for the first time. Norddeutsche Landesbank, Germany’s largest shipping lender, was said to pull plans to sell seven-year euro notes a day after Deutsche Lufthansa AG canceled a similar transaction.

Even Mexico’s peso pared gains, after earlier surging as investors concluded Clinton had won the first presidential debate. An election victory for Republican candidate Donald Trump may hurt bonds in emerging markets such as China and Mexico by weighing on global trade, according to Aberdeen Asset Management Asia Ltd.

The Stoxx Europe 600 Index slid 0.5 percent at 10:59 a.m. in London, after earlier advancing as much as 0.7 percent. The benchmark tumbled the most since July on Monday amid concern about the strength of Deutsche Bank’s capital buffers. S&P 500 Index futures were 0.2 percent higher, paring a gain of as much as 0.7 percent.

“Had Trump been stronger then maybe we would have seen a stronger downside reaction in the market,” said Jasper Lawler, an analyst at CMC Markets in London. “Deutsche Bank is the eye of the storm because even if it’s listed in Germany it’s a multinational bank with a big role in U.S. markets and has a history of causing some troubles in the U.S. The European and U.S. banks have strong links in the end. This at least is the going excuse as markets don’t have the impetus to go higher.”

Volkswagen slid after people familiar with the matter said the U.S. Justice Department is assessing how big a criminal fine it can extract from the German automaker over emissions-cheating. Commerzbank AG dropped on a report it plans to eliminate 9,000 jobs and suspend dividend payments.