The FTSE 100 Index found itself below the 5000 barrier today as fears of a Greek debt default intensified.
Asian markets were sharply lower overnight and triggered a bleak session in Europe, with London’s FTSE 100 Index down 115.7 points at 4959.6 and flagship markets in France and Germany also off more than 2%.
Officials in Athens acknowledged yesterday that Greece would miss its deficit reduction targets for this year and next, while EU finance ministers said the country will have to wait until November for its next loan instalment.
Banks bore the brunt of the latest sell-off as investors also digested signals from continental bank Dexia that it may be forced to spin off assets in order to shore-up its balance sheet.
Royal Bank of Scotland was the leading faller with a drop of 1.6p to 20.8p, while Barclays fell 10.2p to 146.1p and Lloyds Banking Group eased 1.6p to 31.8p.
BSkyB shares were nearly 4% or 23.5p lower at 633.5p after a pub landlady won her legal battle at the European Court of Justice against the Premier League over the screening of games in her pub using a "foreign" television decoder.
Tesco was one of only two risers in the FTSE 100 Index after UBS upgraded its rating on the supermarket giant to buy ahead of its half-year results on Wednesday. Shares were 6.2p higher at 376.7p.