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Traders appeared to be increasingly uncertain about the future of the markets following the announcement by Greece's prime minister George Papandreou plans to hold a referendum about the latest bailout package, reports Reuters.
The announcement prompted the largest sell-off seen in the last six weeks as investors acted on concerns that a new eurozone crisis may emerge.
Last week, EU leaders agreed on a deal that will increase the European Financial Stability Facility to $1 trillion (£876 billion).
The banks holding Greek debt agreed to accept a 50 per cent loss on their investment and to generate more capital to ensure they can protect themselves against any future losses incurred if governments default on loans.
Among the firms to register significant declines on the FTSEurofirst 300 were Credit Agricole and Societe Generale, which fell by 11 per cent and 12 per cent respectively.
Posted by Chris Weaver
