A move by euro zone finance ministers to delay a decision on paying more emergency aid to Greece pushed stocks lower in morning trading on Tuesday.
The 17 euro zone nations are meeting in Luxembourg for a second day of talks, but the postponement of the next installment of bailout money for Athens has only increased investor nervousness.
French and German stocks were down by as much as three per cent. The UK’s FTSE index slid by at least two per cent.
European banks were amongst the biggest losers.
Investors fear governments may have to prop up banks that have lent heavily to Greece in the event of a sovereign default.