Having opened more than one per cent down after the Greek people voted against bailout conditions set by the country's lenders, the FTSE 100 later recovered some of those losses and was trading down 0.3 per cent in mid-morning. Meanwhile, the Cac was down 1.2 per cent and the Dax fell 0.9 per cent.
The euro was 0.53 per cent down against the dollar, at $1.1055.
Although its lenders have insisted there is no opportunity for further negotiation, Prime Minister Alexis Tsipras has hinted throughout the process that a "no" vote will put the Greeks in a stronger position.
This morning finance minister Yanis Varoufakis fell on his sword in an effort to show lenders the country is serious about furthering negotiations.
Analysts warned the markets were in for worse.
"This morning is all about breaking news and shocking outcomes," said Avatrade's Naeem Aslam.
"There are many questions being raised if Greece will remain part of the Eurozone, or whether its leaders will show the country the exit gate."
"Given the size of the 'no' support, the Eurogroup will have to consider the strength of the threat of political contagion," added Rebecca Healey, consulting analyst at Tabb Group Europe.
She added that further negotiations are likely to be as slow as they have been.
"As urgent as this is, the Eurozone leaders are once again unlikely to act in a hurry.... Severe fallout from the Greek 'no' to the markets is on the cards, and while the European Central Bank (ECB) may not want to lend to Greece, [it] may have to intervene in the bond markets to prevent a bailout.
"Greek banks are apparently now days, if not hours, away from running out of cash. Greece’s manufacturing system is grinding to a halt; imports and raw materials have been stuck in ports since the imposition of capital controls.
"The options now a very simple: either the ECB keep emergency funding for Greek banks at the current restricted level, which would enable Greek banks to reopen on Tuesday; or the Greek government prints their own Euros /California IOUs or/Drachmas."