World markets slumped today as the Eurozone sovereign debt crisis appeared to be deepening as German Chancellor Angela Merkel suffered a regional election defeat which undermined her power.
With the world looking to Germany to help steer the Eurozone out of stormy economic waters the confidence of investors was sapped.
Meanwhile a series of meetings on the debt problems over the weekend failed to provide any hope that the crisis will be resolved any time soon.
Greek Prime Minister George Papandreou had been due to fly to the US for talks over the beleaguered state of the country's finances but that was called off as he was forced to turn his attention to an emergency cabinet meeting on austerity measures.
The confusion served to spook markets already volatile as the world economic recovery stutters.
The FTSE 100 was dragged down by banks, with the top three fallers on the index coming from the sector.
Barclays and RBS were down more than six per cent while Lloyds was off by more than four per cent.
Those falls were mirrored across Europe with the FTSEurofirst 300 index of top European shares down 1.5 per cent. Banks were 2.9 per cent down overall and Societe Generale tumbled 6.8 per cent.
Miners in London also took a battering as confidence in world economic growth drained away. Antofagasta was down by 4.1 per cent along with Kazakhmys while Rio Tinto nudged down by 3.8 per cent and Anglo American 2.8 per cent.
There were few gainers on the blue chip index with retailer Next, which edged up by 0.6 per cent, one of the few companies in positive territory.
Across the FTSE, grocery delivery service Ocado saw its shares fall by 13 per cent after reporting a slowing of sales growth in the third quarter.
Meanwhile the MSCI world equity index fell 0.9 per cent today, after posting its biggest weekly gain since early July last week.
The Nikkei bucked the negative trend with a 2.2 per cent rise on close while the Hang Seng was down 2.7 per cent.