Britain and France rushed to offer reassurance on Monday that their economies and banking systems would ride out global credit turmoil after Citigroup said it could write off $11 billion of subprime mortgage losses.

But European shares headed south as analysts said fears about the depth and longevity of the credit crisis had returned with a vengeance.

Charles Prince resigned as head of the U.S. banking giant on Sunday, carrying the can for expected losses of $8-11 billion before taxes, that on top of the $6.5 billion it wrote off three weeks ago on subprime mortgages, loan losses and other debt.

The journey through the financial turmoil has ... gone back to resembling a tunnel of fear, with new scary monsters jumping out of the dark at every corner, Unicredit said in a client note.

Prince's departure came five days after Merrill Lynch & Co ousted its chief executive, Stanley O'Neal, following an $8.4 billion write-down there.

European governments were keen to downplay the threat of contagion on their turf.

British Chancellor of the Exchequer Alistair Darling said the global banking industry was experiencing great uncertainty, but it was vital to keep Citigroup's problems in perspective.

We are experiencing an unparalleled period of financial uncertainty caused by the problems in the U.S. housing market, Darling told BBC radio. I believe that we can get through that.

Many banks in this country have very strong balance sheets after years of making very good profits, he said. The British economy is strong, it's been growing now for 10 years. That's why I believe that despite this international uncertainty ... there are grounds for believing that we will get through this.

French Economy Minister Christine Lagarde said there was no reason to believe the turmoil would damage the French economy.

This crisis does not seem to be having any impact on the American real economy, Lagarde told Europe 1 radio. If the American real economy is protected, there is no reason to believe that there will be an effect on the French real economy. That said, we must remain very attentive and very cautious.

Economic data from the United States have generally shown sturdy resilience -- figures on Friday showed job growth surged last month at twice the rate expected, for example.

Bank of Japan Governor Toshihiko Fukui said downside risks stemming from the U.S. economy and global financial markets were heightening and that the process of repricing risks in global markets would take more time.

But focusing too much on short-term downside risks could lead to long-term risks. We must think about risks of keeping easy policy too long, he said.

MERRY-GO-ROUND

World markets were first gripped by a credit crunch in August when interbank lending dried up as banks realized they did not know which of them was dangerously exposed to mass defaults on U.S. mortgage loans to people poorly equipped to pay them back.

After interest rate cuts from the U.S. Federal Reserve and a flood of central bank cash into the money markets to keep them functioning, investors had begun to move back into risk assets in the hope that monetary authorities had capped the crisis.

Latest data from EPFR Global showed that in the last week of October, there were net inflows of $5.74 billion into emerging market stock and bond funds.

But with shaky U.S. home loans bundled up into complex financial products and sold on around the globe, uncertainty about where the exposure lies remains intense.

And with uncertainty comes market jitters, not least in Britain.

Shares in Barclays fell as much as 8 percent to hit 2-1/2 year lows on Friday, amid market talk of funding worries and speculation it is telling analysts to trim profit forecasts.

Britain's third-largest lender declined to comment.

Britain also suffered its first full-blown bank run since the 19th century in September when the Bank of England stepped in to offer Northern Rock funding as lender of last resort.

Barclays' shares dropped a further 3.4 percent on Monday, while Royal Bank of Scotland fell 3.3 percent and Deutsche Bank was trading down 2.7 percent, caught in the backwash from Citigroup's losses.

Safe haven government bonds were snapped up, euro zone government bond prices climbing to near two-week peaks.

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