Standard & Poor's has downgraded the credit ratings of a raft of eurozone nations including Italy, Spain and Portugal as well as stripping France and Austria of their AAA status.
German chancellor Angela Merkel has said she cannot guarantee support of the controversial financial transaction tax - known as the Tobin tax - which threatens to create a rift between Germany and France days before a crucial European summit.
We ask investment experts for their forecasts for 2012.
Europe's single currency reached a 15-month low against the dollar following a French bond auction this morning which saw almost all of the €8bn of debt targeted being sold.
Head of the International Monetary Fund (IMF) Christine Lagarde has warned the world economic outlook is "gloomy" and no country is safe from rising risks.
The head of the Bank of France has attacked the UK's AAA-rating and called for it to be downgraded - as expectations increase of a downgrade to France's rating.
European leaders have abandoned plans for bondholders to bear the brunt of sovereign debt collapses, following talks overnight to tackle the eurozone crisis.