It came after Greece said it would not meet this year's deficit cutting target, sparking a sharp sell-off in stock markets.

However Eurogroup chairman Jean-Claude Juncker said Greece would not be allowed to default on its debts.

The next 8bn-euro (£6.9bn; US$10.9bn) tranche of cash needs to be released by mid-November.

Inspectors from the International Monetary Fund (IMF), European Union (EU) and European Central Bank are currently in Athens to examine Greece's financial position.

A further eurozone meeting on October 13 will make a decision on whether additional steps by Greece to balance its budget are sufficient.

Meanwhile, emergency talks over the future of Franco-Belgian bank Dexia added to market fears that a Greek default could spark a banking crisis.

Industrial stocks - which are most exposed to any renewed economic downturn - were also among the worst hit.

In the currency markets, the euro fell sharply, down 1.4% against the dollar in late trading, and dropping 2% to a decade low of 101 yen against the safe-haven Japanese currency.