European shares are on pace for their biggest single-day drop in four months as investors continue to worry that officials have yet to find a lasting solution to the region's sovereign debt crisis.
The broadest measure of blue-chip European stocks, the FTSE Eurofirst 300, fell 1.6 percent by mid-morning London time while Britain's benchmark FTSE 100 dipped 1.7 percent.
The Bank of Spain added to investor concern this morning when it published second quarter GDP figures indicating a deeper and longer lasting recession in Spain's economy than first anticipated. The full 1 percent contraction from last year put further pressure on Spain's borrowing costs, which rose to a record high 7.57 percent in active trading.
Meanwhile, the newly elected coalition government in Athens is preparing to meet officials from the so-called Trokia of lenders this week as it struggles to find its way back on course to meet the spending cut and tax increase targets linked to its €240bn bailout.
Here in the UK, flight-to-safety flows have lifted Gilt prices across the board, pushing yields on benchmark 10-year Gilts to an all-time low of 1.438 percent.
Elsewhere the Euro is trading at an 11-year low against the yen and touched fresh two-year lows of 1.2081 against the US dollar. The pound sterling, meanwhile, touched a three and a half year high against the European single currency.