Exchange traded funds that invest in financial stocks led the move lower in global equity markets on Tuesday as investors continued to fret about Europe’s debt fracas and weak unemployment data in the U.S.

Financial Select Sector SPDR Fund (NYSEArca: XLF) fell about 3%. Top bank holdings Citigroup (NYSE: C) and Bank of America (NYSE: BAC) were down 4% and 5%, respectively.

After Friday’s closing bell, the Federal Housing Financial Agency said it was suing 17 financial institutions for allegedly misrepresenting the quality of mortgage backed securities packaged and sold to Fannie Mae and Freddie Mac, Forbes reported.

Investors are worried banks could be forced to put the soured securities back on their balance sheets. Friday’s bleak employment report added to the selling pressure on U.S. financial stocks. [Financial ETFs Decline]

Financial sector ETFs are back under the gun following their recent outperformance. That bounce and Warren Buffett’s $5 billion investment in Bank of America had raised hopes the sector was bottoming. [Are Bank ETFs Finally Turning Around?]

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