Panic selling, fuelled by concerns over growing premiums for holding Italian and Spanish bonds, led to stocks declining across the world.
Italy and Spain, the eurozone’s third and fourth biggest economies were at the centre of the market turmoil amid renewed fears about the impact of savage austerity measures, the Guardian said.
In contrast, safe haven assets such as gold, the U.S. dollar and bonds in the U.S., Germany and Britain were in demand.
The yield on Italy’s 10-year bond rose to 5.58 percent on Tuesday, the largest since February, while yields on Spain’s 10-year government bonds rose to 5.93%, nearing the closely-watched 6% the first trading day after the four-day Easter weekend.
The Spanish IBEX 35 index dropped 3 percent to 7,433.60 on Tuesday, its lowest closing level since March 2009. The Italian FTSE MIB index sank 5 percent to 14,458.88, which was the biggest one-day drop since the beginning of November. The pan-European Stoxx Europe 600 index closed 2.5 percent lower at 252.57.
Germany’s DAX 30 dropped 2.5 percent, London’s FTSE 100 lost 2.2 percent and France’s CAC-40 declined by 3.1 percent.
Later in the day on Wall Street, the Dow Jones Industrial Average (DJIA) lost more than 200 points, and stood at 12715.93 points, posting this year’s biggest decline. Nasdaq slid below 3,000 points for the first time since March. The SP 500 declined to 1358.59 points.
Key Asia-Pacific stock markets opened on Wednesday with losses ranging between 0.60 and 1.46 percent.
Japan’s Nikkei 225 declined by 1.46 percent in the early hours of trade and stood at 9398.6 points. Australia’s SP/ASX 200 was 4266.4 points, down 0.6 percent from Tuesday’s close. Hang Seng stood at 20078.9 points, down 1.36 percent, while Shanghai’s SSE Composite lost 1.09 percent and stood at 2280.75 points.