Weak US jobs data has caused panic in global markets and forced US Treasury yields to fall to yet another record low.
Asian markets fell more than 1% in some regions overnight, with the wider area set for its biggest monthly drop since the financial crisis of 2008.
European leaders are working on a scheme to tackle the eurozone crisis which, if implemented, would see a continent-wide rescue fund seize control of struggling banks.
The FTSE 100 has dropped more than 1% as the Spanish banking crisis intensified, with shares in bailed out Bankia shedding 25% today alone.
Asian markets climbed overnight on indicators the Federal Reserve may initiate further quantitative easing, after initially putting plans on ice.
Ratings agency Moody's Investors Service has cut the long-term debt and deposit ratings for 26 Italian banks as the crisis in Europe clouds their prospects.
Markets in the US and Asia fell yesterday after a tough day for European shares which left many indices sharply lower.
UBS shareholders including F&C are set to rebel against the Swiss bank's proposed pay packages for its top executives, echoing the moves taken by Barclays shareholders last week.
London's blue chip index was in negative territory this afternoon, snapping a four-day winning streak as eurozone concerns once again came under the spotlight.
Shares in Aberdeen Asset Management led the FTSE 100 leaders board this morning after the group saw profits climb 14%.