Europe suffers historic market blow amid weak world economies

European markets have continued a steep sell-off, with investors worried about both the eurozone debt crisis and the weak US economy.

Asian markets had slumped with Japan's main index down 3.7% and Hong Kong's 4.6% lower.

In London, banking shares saw heavy falls, with Royal Bank of Scotland down 9%, and Lloyds Banking Group 7% lower.

Concerns over the ability of governments to pay their debts, which have led to Greece, the Irish Republic and Portugal already being bailed out, have now spread to Spain and Italy.

Susannah Streeter reports.