Banks bore the brunt of heavy selling on European equity markets overnight, with British lending institutions among the hardest hit by jittery global investors.The gloom that descended on European bourses in the past seven trading sessions continued to rule investor sentiment in London, Paris and Frankfurt, with each market's flagship index posting losses of more than two per cent in morning trading.However, major banks underperformed most other sectors across each market, with HSBC (down 3.2 per cent), Standard Chartered (down three per cent) and Barclays (down 2.5 per cent) among the biggest decliners on the London exchange.Troubled German behemoth Deutsche Bank was pummelled, sliding 3.5 per cent to a 12-month intraday low as investors pondered how renewed market volatility might complicate the group's recovery program.Heavy early losses on European markets were mitigated in late trading after yields tapered on US government bonds.The instability in European trading followed another chaotic session on the ASX on Tuesday, which saw each of the four major banks post losses of around three per cent - in line with the wider market.CLSA analyst Brian Johnson said the equity market sell-off could lead to revaluations of all listed Australian banks.However, he said the effects of rising bond yields in the United States might take some time to show up in the funding profiles of the local banks because many had already raised "cheap" cash through offshore programs towards the end of last year and into last month."We should remember that we are coming off historically low yields - up until a week ago funding costs were at record lows," he said."But I think it's fair to say we might be at an inflexion point."It is understood that Westpac has already raised 60 per cent of the $25 billion it targeted for wholesale funding in 2018.The bank raised $8 billion through a program completed in December and roped in another $7 billion in January, several weeks before yields on US treasuries began to spike.