European stocks plummet on debt plan worries; DAX plunges 5.76%

Investing.com - European stock markets extended losses on Tuesday, after Greek Prime Minister George Papandreou called a referendum on the new aid package fanning fears over the debt crisis in the euro zone.

During European afternoon trade, the EURO STOXX 50 plummeted 5.44%, France’s CAC 40 tumbled 5.26%, while Germany’s DAX 30 plunged 5.76%.

European stocks continued to fall amid fears that Greece could move closer to a sovereign default, increasing the risk of contagion in global financial markets, if the vote on the bailout deal is rejected.

The financial sector extended losses as shares in France's Societe Generale plunged 17.71% and BNP Paribas plummeted 11.93%, while German lender Deutsche Bank tumbled 10.27%.

Peripheral banks were also broadly hit, led by Italian lenders as Unicredit shares sank 11.567% and Intesa Sanpaolo plummeted 14.02%, while Spain's BBVA and Banco Santander dropped 6.43% and 5.46% respectively.

 Meanwhile, Credit Suisse plunged 6.12% after announcing 1,500 job cuts and said it was slashing risk-related assets in fixed income as it reported poor third-quarter earnings at its investment bank.

Elsewhere, Imperial Tobacco, the world's fourth biggest cigarette group, was down 0.88% after the ending of a price war in Spain and as the firm matched forecasts with a 5.1% rise in annual earnings. 

In London, commodity-heavy FTSE 100 tumbled 3.35% tracking losses in energy stocks as data showing that Chinese manufacturing activity dropped to its lowest level since February 2009 weighed on the global economic outlook.

Mining giants Rio Tinto and Bhp Billiton extended losses, with shares sinking 5.13% and 4%, while copper producers Xstrata and Kazakhmys continued to plummet, with shares tumbling 6.72% and 7.17%.

Meanwhile, U.K. banks remained sharply lower, shadowing their European counterparts. Shares in Barclays plummeted 11.02% and the Royal Bank of Scotland plunged 8.63%, while Lloyds Banking and HSBC Holdings dropped 6.45% and 4.23% respectively.

Elsewhere, U.S. equity markets pointed to a sharply lower open. The Dow Jones Industrial Average futures pointed to a fall of 1.94%, S&P 500 futures signaled a 2.91% drop, while the Nasdaq 100 futures indicated a decline of 2.26%.

Later in the day, the Institute of Supply Management is to produce a report on U.S. manufacturing activity.