[LONDON]Europe's main stock markets slumped on Tuesday, as Greece warned that it could run out of cash in two weeks with debt repayments looming, raising fears about its eurozone future.
London's benchmark FTSE 100 index slumped 1.37 per cent to 6,933.80 points, while the CAC 40 in Paris fell 1.06 per cent to 4,974.65 points.
The DAX 30 in Frankfurt meanwhile slid 1.72 per cent to 11,472.41 points compared with Monday's close.
"European equities are trading sharply lower... extending yesterday's losses after Greece's increasingly dire financial situation is once again taking centre stage," said Markus Huber, senior analyst at brokers Peregrine & Black.
Greece was forced to tap into an emergency account to meet a debt repayment of 750 million euros (US$845 million) due Tuesday to the International Monetary Fund, a central bank source told AFP.
Athens thus narrowly averted a default that could have seen it crashing out of the euro, but warned that without a bailout deal with its EU-IMF creditors it faces another cash crunch in two weeks.
In foreign exchange the European single currency managed to rise against the dollar on some relief at Athens's payment - trading at US$1.1235 from US$1.1154 late in New York on Monday.
Greece's new radical left government scraped enough cash together Monday to place the order for the repayment of 750 million euros after pledging to honour both its international and domestic debt obligations.
Greece won some support in the latest round of debt talks as it battles to keep itself solvent, but eurozone finance ministers have demanded more key reforms before they agree to release the final 7.2-billion-euro tranche of its EU-IMF bailout.
"While the Greeks may have stumped up some cash to appease their creditors in the short term, unless they can get through the current impasse and reach agreement on austerity measures, markets will remain jittery," said Mike McCudden, head of derivatives at stockbroker Interactive Investor.
On the corporate front, shares in EasyJet dived after the budget carrier said a strike by French air traffic controllers last month would slash profits.
It comes after the British airline said it had managed an unlikely profit during its first half, a period when carriers normally report losses, thanks to lower fuel costs and a stronger pound.
But EasyJet shares tumbled 9.77 per cent in London afternoon deals to 1,654 pence after it said that April's strike action by French air traffic controllers would hit pre-tax profits by £25 million (US$39 million).
"Warning of turbulence ahead has taken the shine off a sunny start after delivering profits in its seasonally weaker first half," said Peter Ward, dealer at London Capital Group.
"Cheaper fuel costs helped the first half as expected, but... French strike action as EasyJet embarks upon its key summer travel season has ruffled investors."
US stocks opened lower Tuesday as worries about spiking bond yields outweighed news that Verizon would buy AOL for $4.4 billion.
Five minutes into trade, the Dow Jones Industrial Average was down 0.17 at 18,074.87 points.
The broad-based S&P 500 dropped 0.36 per cent to 2,097.79, while the tech-rich Nasdaq Composite Index lost 0.40 per cent to 4,973.54 points.