LONDON (AP) — Markets were spooked Wednesday by scenes of violent protests on the streets of Athens and Madrid, which reignited concerns over Europe's ability to implement the measures needed to deal with its big debts.
A day after U.S. stocks suffered their biggest retreat in three months on comments from a leading official at the Federal Reserve, investors have grown jittery over the future of the euro. That heaped pressure on the single currency, which fell further below $1.30, and sent oil prices back below $90 a barrel.
The latest turmoil to afflict the 17-country eurozone began late Tuesday, when clashes broke out at a demonstration in Madrid that was protesting new austerity measures from the Spanish government. That was followed Wednesday by a general strike in Greece, which also turned violent.
In Europe, Spain's IBEX index led the list of fallers, closing 3.8 percent lower at 7,867.80, while the yield on the country's 10-year bond edged up to 6 percent.
Elsewhere, Germany's DAX closed 2 percent lower at 7,276.51 while the CAC-40 in France fell 2.8 percent to 3,414.84. The FTSE 100 index of leading British shares ended 1.6 percent lower at 5,768.09.
The falls marked a sharp end to weeks of upbeat investor sentiment. Markets have been buoyant since the European Central Bank unveiled in August a plan to lower the borrowing rates of countries like Spain and Italy and prevent a breakup of the 17-country eurozone. Fresh stimulus measures from major central banks also boosted sentiment.
"Looking at the sea of red across my screens today it seems that markets have finally woken up to the fact that the eurozone is still in deep trouble and that the ECB alone cannot successfully pilot a safe course out of its economic maelstrom," said Mike Ingram, market analyst at BGC Partners.
"European politicians need to take heed from U.S. Founding Father Benjamin Franklin when he said 'We must, indeed, all hang together, or assuredly we shall all hang separately'."
U.S. stocks also fell, with the Dow Jones industrial average down 0.1 percent at 13,450 and the broader S&P 500 index 0.4 percent lower at 1,436.
Wall Street also fell on Tuesday's, when investors were unnerved by a warning from the Fed's Charles Plosser that the central bank's efforts to support the world's biggest economy would likely fall short of its goals.
Earlier in Asia, Japan's Nikkei 225 stock average closed down 2 percent at 8,906.70 and Hong Kong's Hang Seng dropped 0.8 percent to end at 20,527.73. South Korea's Kospi shed 0.6 percent to 1,980.44. China's Shanghai Composite Index shed 0.6 percent to 2,004.17.
The tensions weren't just evident in stock markets — the euro was down a further 0.3 percent at $1.2854. Only last week, it was trading at multi-month highs around $1.32.
Meanwhile, the benchmark New York oil contract was $1.89 lower at $89.48 a barrel.