Stock markets slumped across Europe today as mounting concerns over Spain and fresh strike action in Greece sent investors heading for the exit.

London's FTSE 100 Index fell 1.5%, while the Cac 40 in France was 2% lower and Germany's Dax dropped 1.9% as eurozone crisis fears escalated.

Uncertainty over whether Spain will accept the terms of a bail-out sparked the latest sell-off, following violent riots in the country and as strikers again took to the streets in Greece to protest against austerity measures.

greece protests

Violence in Greece and Spain has affected stock market confidence

Investors were also spooked by a member of the US Federal Reserve casting doubt on the effectiveness of its economy-boosting efforts, which sent the Dow Jones Industrial Average on Wall Street more than 100 points lower overnight.

An uncertain start to trading on the Dow today fuelled the rout in London and Europe.

Spain's central bank said the country's gross domestic product continued to fall at a "significant rate" in the third quarter.

Worries over Spain caused 10-year bond yields to rise above 6% for the first time since the European Central Bank outlined plans to intervene in the European bond market earlier this month.

stock market

The stock markets took a hit on Wednesday in response to the turmoil

Banks and financial stocks were among the worst hit on the FTSE 100, with Royal Bank of Scotland and Barclays down 5%, while Lloyds Banking Group dropped 4%.

In the insurance sector, RSA fell 4%, Aviva shed 3% and Prudential was 2% lower.

There were only a small handful of blue-chip firms in positive territory, with investors fleeing to defensive stocks such as cigarette maker British American Tobacco, up 0.4%.

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  • A riot policeman reacts after he was hit by a petrol bomb thrown by protesters during a nationwide general strike in Athens, Wednesday, Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Petros Giannakouris)

  • GREECE-ECONOMY-STRIKE-DEMO

    Firebombs explode in front of riot police on September 26, 2012 in Athens during clashes with demonstrators at a 24-hours general strike. Police in Athens clashed with hooded youths throwing firebombs on the sidelines of a large demonstration against a new round of austerity cuts. AFP PHOTO / ARIS MESSINIS (Photo credit should read ARIS MESSINIS/AFP/GettyImages)

  • GREECE-ECONOMY-STRIKE-DEMO

    Firebombs explode in front of riot police on September 26, 2012 in Athens during clashes with demonstrators at a 24-hours general strike. Police in Athens clashed with hooded youths throwing firebombs on the sidelines of a large demonstration against a new round of austerity cuts. AFP PHOTO / ARIS MESSINIS (Photo credit should read ARIS MESSINIS/AFP/GettyImages)

  • GREECE-ECONOMY-STRIKE-DEMO

    Firebombs explode in front of riot police on September 26, 2012 in Athens during clashes with demonstrators at a 24-hours general strike. Police in Athens clashed with hooded youths throwing firebombs on the sidelines of a large demonstration against a new round of austerity cuts. AFP PHOTO / ARIS MESSINIS (Photo credit should read ARIS MESSINIS/AFP/GettyImages)

  • GREECE-ECONOMY-STRIKE-DEMO

    Firebombs explode in front of riot police on September 26, 2012 in Athens during clashes with demonstrators at a 24-hours general strike. Police in Athens clashed with hooded youths throwing firebombs on the sidelines of a large demonstration against a new round of austerity cuts. AFP PHOTO / ARIS MESSINIS (Photo credit should read ARIS MESSINIS/AFP/GettyImages)

  • Protesters of the Greek Communist party affiliated unions march in front of the Greek Parliament in Athens Wednesday Sept. 26, 2012. Greek workers walked off the job Wednesday for the first general strike since the country's coalition government was formed in June, as the prime minister and finance minister hammered out a package of euros 11.5 billion ($14.87 billion) in spending cuts. (AP Photo/Dimitri Messinis)

  • Protesters of the Greek Communist party affiliated unions march in front of the Greek Parliament in Athens Wednesday Sept. 26, 2012. Greek workers walked off the job Wednesday for the first general strike since the country's coalition government was formed in June, as the prime minister and finance minister hammered out a package of euros 11.5 billion ($14.87 billion) in spending cuts. (AP Photo/Dimitri Messinis)

  • Protesters of the Greek Communist party affiliated unions march in front of the Greek Parliament in Athens Wednesday Sept. 26, 2012. Greek workers walked off the job Wednesday for the first general strike since the country's coalition government was formed in June, as the prime minister and finance minister hammered out a package of euros 11.5 billion ($14.87 billion) in spending cuts. (AP Photo/Dimitri Messinis)

  • A fire bomb explodes among riot police during clashes in Athens, Wednesday Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles after an anti-government rally called as part of a general strike in Greece turned violent. About 50,000 people joined the union-organized march held during a general strike against new austerity measures planned in the crisis-hit country. (AP Photo/Dimitri Messinis)

  • A fire bomb explodes among riot police during clashes in Athens Wednesday Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles after an anti-government rally called as part of a general strike in Greece turned violent. About 50,000 people joined the union-organized march held during a general strike against new austerity measures planned in the crisis-hit country. (AP Photo/Dimitri Messinis)

  • A riot police officer kicks a tear gas canister during clashes in Athens, Wednesday Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles after an anti-government rally called as part of a general strike in Greece turned violent. About 50,000 people joined the union-organized march held during a general strike against new austerity measures planned in the crisis-hit country. (AP Photo/Dimitri Messinis)

  • Riot police officers try to arrest a masked demonstrator during clashes in Athens, Wednesday Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles after an anti-government rally called as part of a general strike in Greece turned violent. About 50,000 people joined the union-organized march held during a general strike against new austerity measures planned in the crisis-hit country. (AP Photo/Dimitri Messinis)

  • A protester throws a fire bomb toward the riot police during clashes in Athens, Wednesday Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles after an anti-government rally called as part of a general strike in Greece turned violent. About 50,000 people joined the union-organized march held during a general strike against new austerity measures planned in the crisis-hit country. (AP Photo/Dimitri Messinis)

  • Riot police officers arrest a demonstrator, partially seen on ground, during clashes in Athens Wednesday Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Dimitri Messinis)

  • A fire bomb explodes among riot police during clashes in Athens Wednesday Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Dimitri Messinis)

  • A riot policeman is on fire from a petrol bomb thrown by protesters during a nationwide general strike in Athens, Wednesday, Sept. 26, 2012.Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Thanassis Stavrakis)

  • A riot policeman is on fire from a petrol bomb thrown by protesters during a nationwide general strike in Athens, Wednesday, Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Thanassis Stavrakis)

  • A riot policeman reacts after he was hit by a petrol bomb thrown by protesters during a nationwide general strike in Athens, Wednesday, Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Petros Giannakouris)

  • A fire bomb explodes among riot police during a nationwide general strike in Athens, Wednesday, Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Nikolas Giakoumidis)

  • A fire bomb explodes among riot police during a nationwide general strike in Athens, Wednesday, Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Nikolas Giakoumidis)

  • Riot policemen on fire after a petrol bomb thrown by protesters ignited during a nationwide general strike in Athens, Wednesday, Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Petros Giannakouris)

  • ALTERNATIVE CROP FOR XPG104 - Riot policemen on fire after a petrol bomb thrown by protesters ignited during a nationwide general strike in Athens, Wednesday, Sept. 26, 2012. Police clashed with protesters hurling petrol bombs and bottles in central Athens Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. (AP Photo/Petros Giannakouris)

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