The government was later forced to backtrack to avoid a meltdown, with the finance ministry issuing a statement stressing that the tax on net interest income would be limited at 0.1% of assets.

The weak Chinese trade data didn’t help sentiment either, with imports dropping 12.4% year-on-year in July. Miners and banks underperformed and the FTSE 100 ended the session 0.4% lower.

The blue-chip index bounced back 0.7% this morning as miners and banks recovered, even though China released another weak economic data. The country’s consumer prices contracted last month by 0.3%.

In the FTSE 100, Flutter Entertainment tumbled 5.2%, due to a weak performance in Australia.

Things to read today:

Italy backtracks with cap on windfall tax after bank shares slide (Financial Times)

Loan losses at US banks hit $19bn as borrowers feel rate rise pain (Financial Times)