The FTSE 100 dived on opening today after a meeting tabled to thrash out issues related to the Eurozone debt crisis failed to bear fruit.
London's drop mirrored steep falls on Wall Street and in Asia as investors remained unconvinced by the 16-country bloc's strategy for steering through the crisis.
Eurozone leaders gathered with the expectation that they would agree on the details of Greece's second bailout - but no deal was reached.
With Italy's spiraling debt crisis casting a shadow and Spain also struggling, confidence was draining across global markets.
Consequently financial stocks took the biggest hits with Lloyds down almost five per cent on London's blue chip index. Barclays lost 2.8 per cent while Man Group - the world's biggest hedge fund manager - dropped 3.2 per cent.
Other losers included chipmaker Arm Holdings, down 3.4 per cent, and engineering group GKN which saw more than three per cent wiped off its price.
After news Corp's announcement that it would put its bid for BSkyB on ice for a year its stock still dropped but only by one per cent as the rot was, up to a point, stopped.
There were few winners in early trading with pharmaceutical company Shire the only FTSE 100 company to edge up, but that was only a meager 0.15 per cent.
Across the FTSE the biggest faller was travel operator Thomas Cook which plunged by 28 per cent after it issued a profit warning.
It said unrest in North Africa and the Middle East plus belt tightening in the UK had taken their toll on the business. Premier Oil was down by five per cent after it was revealed that maintenance issues had hit its output.
Meanwhile debt-ridden Italy and Spain saw their markets fall as their debt woes were put under the microscope.
Italy's benchmark FTSE MIB lost four per cent, while Spain's IBEX 35 index dropped 2.6 per cent.
Banks were among the top fallers, with Italy's UniCredit losing 7.1 per cent after plunging nearly 25 per cent in the previous six sessions.
In UK economic news the inflation rate fell unexpectedly in June, with the Consumer Prices Index (CPI) measure dropping to 4.2 per cent. Markets had expected the figure to hold steady at 4.5 per cent.
Meanwhile figures from