The German lender opened 8% lower in Frankfurt though by mid-morning it had fought back to be 4% lower on the day.
Boss John Cryan wrote to the bank’s 100,000-strong workforce to reasssure them: “We are and remain a strong Deutsche Bank.”
But worries about the lender spread to other banking stocks.
The FTSE 100 Index opened more than 100 points lower, before paring back some of the losses .
German and French markets also fell.
It followed a report after European trading closed on Thursday that hedge fund clients had withdrawn excess cash and adjusted positions linked to Deutsche, sending New York-listed shares down 7%.
The bank said in a statement that its trading clients remained largely supportive with the “vast majority” understanding that it had a “stable financial position”.
Mr Cryan wrote to staff that the report on hedge funds had led to “unjustified concerns”.
He said they should “look at the complete picture” of the bank, with its more than 20 million customers, and “extremely comfortable” cash buffer of €215bn (£185bn).
:: Deutsche Bank: Why we should all be deeply concerned
Earlier this week, the lender had sunk to a record low on fears over its funding and the German government had been forced to deny it was preparing a rescue plan.
But in the last couple of days the shares had stabilised.
Fears over Deutsche have deepened recently after it emerged that it was facing a US fine of up to $14bn (£11bn) over its conduct during the financial crisis.
Germany’s banks are, more widely, seeing profits squeezed by the European Central Bank’s negative interest rate and money printing policies, which narrow the margins they can make from loans.
Deutsche is in the midst of a major shake-up to turn around its fortunes.
The size of the global banking giant, and its troubled state, have seen it labelled as the single biggest net contributor of risk to the global financial system by the International Monetary Fund.
News Source SkyNews