PARIS: European shares fell on Tuesday as Italian banks were hit after the cabinet approved a 40% windfall tax on lenders, though a jump in shares of drugmaker Novo Nordisk after positive data on its obesity drug helped limit losses.

Italian banks such as Intesa Sanpaolo, Banco BPM and UniCredit fell between 5% and 9.1% after Deputy Prime Minister Matteo Salvini said a 40% levy on banks’ extra profits will fund

items such as a reduction of the tax wedge, tax cuts and financial support to holders of mortgages on first homes.

The pan-European STOXX 600 index fell 0.2%, while Italy’s banking-heavy FTSE MIB, which had rallied to multi-year highs recently, dropped 2.1% to hit its lowest level in four weeks.

Broader euro zone banks tumbled 3.5% in their worst day since March, also hurt by news that ratings agency Moody’s cut credit ratings of several small- to mid-sized US banks and said it may downgrade some of the biggest lenders in the United States.

China-exposed miners shed 1.8% after data revealed imports and exports in the world’s second-largest economy fell much faster than expected in July, threatening growth prospects and heightening pressure on Beijing to provide fresh stimulus.

“Both of those factors (Italian windfall taxes and weak China trade data) are contributing to this risk aversion that’s sweeping across markets,” said Laura Cooper, senior macro strategist for iShares EMEA at BlackRock.

“When we look at Italian banks, we are seeing signs of pressure but this is coming after quite exceptional performance where the FTSE MIB has been the outlier across the continent.” Novo Nordisk soared 17.3% to a record high, causing its market value to top $300 billion, after the Danish drugmaker said a large study had shown its obesity treatment Wegovy also had a clear cardiovascular benefit.