European equities lost ground in afternoon trading ahead of a crucial EU summit, as Spain officially asked its eurozone neighbours for a bailout.
The EuroStoxx 50 was 1.86% lower at 2,146, while the main French and German stock markets lost 1.8% and 1.7% each.
Shares were also under pressure in London, the FTSE 100 falling 0.79% to 5,470, mirroring losses on the FTSE 250 and the All Share.
In the US, the S&P 500 slumped 1.32% to 1,317 shortly after the opening bell, while the Dow fell 1.16% to 12,493.
The euro weakened while US treasuries rose as investors looked ahead of the European Union summit on 28-29 June.
European leaders are set to discuss specific steps towards a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund, according to reports.
However, uncertainty remains over how the authorities intend to go about severing the link between bank and sovereign debts.
Spain’s Ministry of Economy formally announced its request for "financial assistance for the Spanish banking system" today in a letter sent to Eurogroup President Jean-Claude Juncker.
Although no specific amount was requested in the letter, independent audits last week revealed the country's banks will need up to €62bn.
Rumours rating agency Moody's is preparing to downgrade a raft of Spanish banks this afternoon did little to lift sentiment.
Elsewhere, Goldman Sachs Asset Management’s chairman Jim O’Neill said worries about Greece pale in comparison to the danger from other peripheral southern European countries, such as the third- and fourth-largest economies in the eurozone, Italy and Spain.
“The recent election results in Greece show that the probability of its exit from the euro has considerably diminished. The true problems are Spain and Italy as both are just too big to be ignored”, O’Neill said in an interview with the Spanish newspaper El Mundo.
Additional reporting by ShareCast
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