Global stock markets continued a sell-off triggered last week on heightened worries of a Greek debt default that could hurt the global economy.
European shares follow Asia lower, with the FTSE 100 sliding 122 point - or 2.4pc - to 5091.67, France's CAC tumbling 4.4pc, and Germany's DAX losing 3.1pc. Markets in Italy, Spain and Athens fell 3.2pc, 3.7pc and 3.4pc respectively.
US stock index futures pointed to Wall Street opening sharply lower on fears over a downgrade for French banks over their exposure to Greece where the risk of a debt default rose again after Germany hardened its stance on resuces.
Deutsche Bank and BNP Paribas fell about 10pc while Societe Generale shed 8pc after it said it was accelerating plans to raise over €4bn. In Britain bank shares fell after the Vickers report recommended lenders separate their retail and investment banking arms.
Worries of a rift between German and the rest of the European Central Bank increased on Friday after the surprise resignation from the central bank of Juergen Stark, a key member and harsh critic of its bond buying policy.
Debt-laden Greece highlighted its need for the next tranche of money from the earlier €110bn bailout, when it said it has the cash to operate until next month.
The comments by Filippos Sachinidis, the Greek deputy finance minister, confirm recent reports the country had cash for only a few more weeks, despite Greek Prime Minister George Papandreou insistance over the weekend that his country would not default.
"We have definitely manoeuvring space within October," Mr Sachinidis said in an interview on television channel Mega, responding to questions how much longer the government will be able to pay wages and pensions.
"We are trying to make sure the state can continue to operate without problems," he said.
Earlier, Japan's benchmark Nikkei hit a 28-month low, closing down 2.3pc - its lowest closing level since April 2009. Japan's powerhouse export sector was hit hard by the ongoing strength of the Japanese currency, which makes products more expensive overseas.
The weekend resignation of Japan's new trade minister, Yoshio Hachiro, after just eight days in office also unnerved the Tokyo market.
The Hang Seng shed 4.2pc while Australia's S&P/ASX 200 plunged 3.7pc. Mainland China shares were closed for a national holiday.
"The political theatre playing out in Europe continues to drive investors towards the exits with policymakers adopting an increasingly tough line with respect to Greece as bailout fatigue in northern Europe starts to manifest itself alongside austerity fatigue in southern Europe," said Michael Hewson, market analyst at CMC Markets.
Europe's debt crisis has been one of the main reasons behind the turmoil in financial markets over the past few weeks, though concerns over the global economic recovery have contributed, too.
There is a raft of economic data out this week, particularly from the US, and the hope is that many indicators will recover from the battering they took last month when concerns over a possible US default hung heavily on sentiment.
The Telegraph
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The comments by Filippos Sachinidis, the Greek deputy finance minister, confirm recent reports the country had cash for only a few more weeks, despite Greek Prime Minister George Papandreou insistance over the weekend that his country would not default.
"We have definitely manoeuvring space within October," Mr Sachinidis said in an interview on television channel Mega, responding to questions how much longer the government will be able to pay wages and pensions.
"We are trying to make sure the state can continue to operate without problems," he said.
Earlier, Japan's benchmark Nikkei hit a 28-month low, closing down 2.3pc - its lowest closing level since April 2009. Japan's powerhouse export sector was hit hard by the ongoing strength of the Japanese currency, which makes products more expensive overseas.
The weekend resignation of Japan's new trade minister, Yoshio Hachiro, after just eight days in office also unnerved the Tokyo market.
The Hang Seng shed 4.2pc while Australia's S&P/ASX 200 plunged 3.7pc. Mainland China shares were closed for a national holiday.
"The political theatre playing out in Europe continues to drive investors towards the exits with policymakers adopting an increasingly tough line with respect to Greece as bailout fatigue in northern Europe starts to manifest itself alongside austerity fatigue in southern Europe," said Michael Hewson, market analyst at CMC Markets.
Europe's debt crisis has been one of the main reasons behind the turmoil in financial markets over the past few weeks, though concerns over the global economic recovery have contributed, too.
There is a raft of economic data out this week, particularly from the US, and the hope is that many indicators will recover from the battering they took last month when concerns over a possible US default hung heavily on sentiment.
The Telegraph
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