European stock markets have suffered their biggest quarterly losses in nine years, as investors took cover over fears of a recession in the global economy and the looming threat of Greece facing a default on its vast sovereign debt.
The steep sell-off in major European economies this quarter, wiping $1.2 trillion (£770bn) off European share values, was sparked by an intensification in the eurozone debt crisis and concerns the US could be heading for a recession.
"Any hope that the quarter would end with a flourish for equities has been decimated with another day of broad-based selling in London," said IG Index sales trader Ben Critchley.
"The FTSE may have scraped a close in above the 5,100 mark, but that still comes in at a 13.75 per cent loss on the quarter".
The FTSE 100 closed down 1.3 per cent, faring better than other major European markets but still posting its worst three-month performance in nine years.
Among the worst to suffer in the recent sell-off was Germany's DAX which had outperformed all other European markets in the first half of the year.
The German blue-chip index, home to conglomerate Siemens and automakers Daimler and BMW , lost 25.4 per cent in July-September, its worst quarterly performance since the third quarter of 2002.
France's CAC 40 and Spain's IBEX 35 also posted their biggest three-month fall since the third quarter of 2002, despite their regulators, along with those from Italy and Belgium, banning short selling of financial stocks since August.
The CAC 40 fell 25.1 per cent in July-September, with French bank Societe Generale losing 51 per cent over the same period - its biggest quarterly loss ever.
The IBEX 35 index, meanwhile, was off 17.5 per cent, while Italy's FTSE MIB was down 26.5 per cent.
US and German government bonds, however, were in demand as investors sought shelter in safe-haven assets.
Karen Olney, head of European thematic research at UBS, said European stock valuations may be cheap but investors would remain cautious until eurozone politicians can come up with a decisive plan to finally put to rest the bloc's debt crisis, now threatening Italy and Spain, its third and fourth largest economies.
"Politicians tend to react better when the markets are falling than rising. If we don't get a solution imminently, we could have another leg down," she said.
"In a rising market, they are not going to come up with a grand slam plan. If the markets are suffering again, they may be pushed to come up with a solution that we need. This is why some people consider Europe difficult to invest in, almost uninvestable at the moment."