European equities have been the worst hit naturally, with the DAX down by over 3% to 11138 by mid-morning, the CAC 40 dropping 3.2% to 4898, Spain’s IBEX 35 down 3.7% to 10944 and the FTSE MIB which represents Italy’s top companies was 3.8% lower at 22898.
The FTSE 100 fared better than continental European but shed 1.6% to 6645 in morning trading as investors looked for safety.
Markets in the United States are expected to see a similar sell off when they open this afternoon.
Conversely, bond prices have broadly risen as money pulled from equities came flooding in.
Greece is not the only thing troubling markets at the moment, with escalating concerns over terrorism and China also being factors.
“Global markets today face a triple whammy of negative news, with the deterioration in the Greek situation accompanied by the first chance to react to Friday’s terrorist atrocities and a further steep fall in Chinese markets, taking them to technical bear market territory,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
“The IMF deadline tomorrow now looms large, whilst investors will now be looking for any possibility of an eleventh hour rescue to prevent either or both of a Greek default or exit,” he added.
“I think we are witnessing the maximum level of concern about Greece today,” said Dominic Rossi, Global CIO of Equities at Fidelity Worldwide Investment. “European markets are down 4% and the US is indicated to fall 2%.”
