By Claire West

Almost £50bn was wiped off the value of Britain's 100 biggest companies as markets across the globe experienced falls not seen since October 2008.

Chris Beauchamp from IG Index said;

“Markets were down heavily across the board today, as investors abandon risky assets at a rate not seen for months. Indeed, equity indices are now moving into ‘correction’ territory, as share prices fall 10% from their highs seen in May. The global slowdown and the ever-worsening eurozone debt crisis has raised the spectre of a global meltdown that would put even 2008 in the shade.”

Lloyds Banking Group and Royal Bank of Scotland which are majority owned by UK taxpayers suffered £28bn of losses.

The president of the European commission, José Manuel Barroso said; “Euro area financial stability must be safeguarded."

However the Centre for Economics and Business Research (Cebr) has said; "Realistically, Italy is bound to default, but Spain may just get away without having to do so".