Greece prepared Tuesday to sell another batch of short-term paper as European finance ministers struggled to address its debt crisis and European money markets slumped amid debt contagion fears.
The Greek debt management agency was to auction 1.25 billion euros ($1.77 billion) in six-month treasury bills, the limit of Athens' exposure to markets as fears over its economic troubles have kept longer-term interest sky-high.
The sale comes amid new worries in Europe that on Monday sent the debt cost soaring for Italy and Spain, the eurozone's third and fourth largest economies and triggered a plunge in stock markets and the euro.
A global sell-off continued Tuesday with Asian stocks slumping and European shares slipping further in initial trading, as fears grew that the eurozone debt crisis would spread, raising the prospect of a devastating default in Greece.
London's FTSE 100 index dropped 1.01 percent to 5,869.15 points early Tuesday, Frankfurt's DAX 30 shed 1.63 percent to 7,112.19
points and in Paris the CAC 40 slid 1.74 percent to 3,742.20. The Milan exchange dived 3.3 percent after opening, Madrid lost more than 2.7% after opening.
Shares in German banks and insurers opened sharply lower in Frankfurt on Tuesday because of worries about their exposure to Italy, traders said.
Deutsche Bank, Germany's biggest private lender, was down 5.44
percent while Commerzbank was off 4.39 percent. Shares in insurance giant Allianz were 3.54 percent lower.
In Paris too, banks were losing between 3.5% and 6% on Tuesday morning (07H11 GMT).
On Monday, the Athens stock exchange shed 2.58 percent of its value on a generally disastrous day for European markets that saw the top trading centres in London, Frankfurt, Paris and Milan all posting losses.
Meeting under mounting pressure on the European currency, eurozone nations Monday agreed to beef up a rescue fund, currently at 440 billion euros ($617 billion), to prevent the debt crisis spreading to Italy, Spain and beyond.
Athens now needs a new lifeline because a tough recovery programme supervised by the EU and the International Monetary Fund has failed to reopen the country's access to fresh loans on the open market. - Sapa-AFP