World stock markets fall sharply

Wall Street opened down and European markets all struggled, hit by losses of two to three percent, as investors sold off stocks and the single European currency.
Fears the eurozone debt crisis could be about to snare the banks spiked after Franco-Belgian bank Dexia crashed 37 percent at once stage on concerns that a collapse or break-up of the lender was on the cards.
Responding to the turmoil, France and Belgium said they would guarantee the debts of the troubled cross-border bank that had to be bailed out in 2008.
``The pressure on the banks is taking its cue primarily from the fears over default risk in Europe and the potential for calamity if any default in Greece cannot be contained,'' said Rabobank analyst Jane Foley.
``Dexia's problems stress the point that for eurozone leaders the Greek crisis is less about Greece and more about the potential for it to spark a much more widespread banking and economic disaster,'' she added.
US stocks opened sharply down Tuesday as the impasse over whether Greece should get new bailout funds kept markets across the globe under pressure.
The Dow Jones Industrial Average fell 1.24 percent in the first minutes of trade, with broader S&P 500 off 1.22 percent and the tech-heavy Nasdaq down 0.97 percent.
``Against this bearish backdrop, the Dow Jones Industrial Average is bracing for a third straight triple-digit drop, while the broader S&P 500 Index is headed even deeper into annual-low territory,'' said Andrea Kramer of Schaeffer's Investment Research.
In Europe, London's benchmark FTSE 100 stocks index was down 2.74 percent at 4,936.24 points in afternoon deals, Frankfurt's DAX 30 tumbled 3.41 percent to 5,193.24 points and in Paris the CAC 40 slid 2.86 percent to 2,844.07 points.
Madrid lost 2.49 percent, Milan 2.79 percent and Brussels 3.13 percent.
Asian markets mostly tumbled with Tokyo losing 1.05 percent and Hong Kong 3.40 percent.
In London trade, the euro slumped to $1.3146 _ the lowest level since mid-January. It later stood at $1.3196, up from $1.3178 late in New York on Monday.
The single currency meanwhile edged back up to 101.28 yen after having traded earlier at 100.76 yen _ the lowest level since 2001.
Dexia, which specialises in providing financing to local authorities especially in France, could be the first major banking victim of the eurozone debt crisis, brought down in part by a credit crunch.
Data from the European Central Bank showed eurozone banks deposited the biggest amount of overnight funds at the ECB so far this year in a signal that interbank lending has frozen up.
``Investors are facing the real possibility that bank exposures to sovereign debt and an increasing shut down in interbank lending markets could trigger a new banking crisis,'' said Joshua Raymond, chief market strategist at City Index.
``Bank shares have seen high volatility which in itself is exacerbating investor fears and uncertainty over the crisis,'' he said.
Eurozone finance ministers on Monday said they would once again delay releasing a much-needed eight billion euros to Greece to help it meet its debt obligations after Athens admitted it would miss its deficit targets.
Eurogroup chairman Jean-Claude Juncker said Monday that eurozone partners had asked the Greek government to take moves to ensure further savings in 2013 and 2014.
That would then lead to a ``definite and final decision in the course of October``, Juncker said.
However, despite Juncker saying he ``firmly denied'' any suggestion that Greece would be allowed to default on its debts, traders were panicked.
``The EU finance ministers' meeting appears to have increased uncertainty over the near-term outlook for Greece,'' said Lee Hardman, a currency economist at The Bank of Tokyo-Mitsubishi UFJ.
Michael Hewson, analyst at traders CMC Markets said: ``Concerns about a likely Greek default continue to unsettle markets and assurances last night from Juncker ... are unlikely to convince them otherwise.''