The FTSE 100 was 0.6 per cent down in late morning trading today, after Greece confirmed last night it will definitely miss today's 6pm deadline to pay the International Monetary Fund (IMF) €1.6bn (£1.1bn).
Meanwhile, although both the Cac and the Dax fell, their losses were rather less muted than yesterday, with the German index just 0.25 per cent down by late morning, while its French counterpart fell 0.05 per cent.
After a surprisingly moderate day yesterday, the euro fell 0.6 per cent against the dollar, to $1.1169. It fell 0.5 per cent against the pound to £0.71048.
All eyes are now on the potential outcome of a referendum, to be held on Sunday, in which Greeks will vote whether or not to accept a package of reforms set out by the country's creditors which will unlock another tranche of bailout money.
Late last night the Eurozone's three biggest countries warned that a "no" vote would set off a process which would result in a Greek exit from the single currency.
But Alexis Tsipras, the country's embattled prime minister, has urged people to reject the proposals "with all our strength".
"The Greek saga is at boiling point," said Naeem Aslam, chief market analyst at Ava Trade.
"If there is anything good going to come out of this useless, deadlock negotiation attempts, we are not very optimistic about this.