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Greek political leaders thought they had reached a suitable position to confirm the rescue money after swingeing austerity cuts but eurozone ministers have imposed additional conditions, reports Reuters.
The FTSEurofirst 300 index of top European shares dropped by 0.6 per cent to 1,066.73 points, while the STOXX Europe 600 banking index, exposed to the eurozone's sovereign debt, slumped by 1.9 per cent.
Justin Urquhart Stewart, director at Seven Investment Management, said it is unlikely Greece will be willing or able to carry out the further measures required.
"It seems inevitable Greece is going to go to a euro lite, or exit the euro altogether," added Mr Stewart.
European stocks rose yesterday for the first time in four days after the European Central Bank moved to keep its interest rates steady, Bloomberg noted.
Posted by Greg Secker
