The euro fell to a 13-month-low against the dollar, dropping to US$1.3004, after earlier slipping below the US$1.30 mark.

The slides came despite an agreement reached over the weekend to provide Greece with US$143bn, three-year bail-out package.

US stock markets had their worst session in three months, with the Dow Jones falling by 2%, the tech-based Nasdaq by 2.98% and the S&P 500 by 2.38%.

It came after drops earlier in the day in Europe.

In both London and Frankfurt, the leading share indexes closed down 2.6%, while in Paris the main index lost 3.6%. Shares in Athens closed down 6.7%.

There have also been worries that other European countries, such as Portugal and Spain, may also find it difficult to raise enough money to service their high budget deficits.

Portugal and Spain had their credit rating downgraded last week, and any further downgrades would raise the cost of future government borrowing even further, analysts warn.

Spanish Prime Minister Jose Luis Rodriguez Zapatero moved to calm investors by saying his country had a lower debt-to-GDP ratio than the European average.

Spain's debt-to-GDP ratio is just over 52%, compared with Greece's 115%.