The euro has hit its weakest level against the pound since 2007 and stock markets are tumbling as the financial crisis in Greece deepens.
Asia was first to react to the growing prospect of Greek default and exit from the eurozone with stocks falling more than 3% in Hong Kong and Japan.
European stock markets also dived, with the CAC 40 in Paris and the German DAX both losing 4.3% on opening.
Banking stocks in Spain, Italy and Portugal bore the brunt of the sell-offs in their respective countries.
The FTSE 100 in London fell 2.2%.
London-listed travel firms were particularly badly hit with TUI Group, behind the Thomson brand, falling more than 8% in early trading while Thomas Cook lost 6.8%.
The falls reflected not only the uncertainty over Greece but also the impact of the terror attack in Tunisia which is believed to have left 30 Britons dead.
The owner of British Airways, International Airlines Group, lost more than 4% of its value in the first hour.
The euro reached an eight-year low against sterling in early Asia trading.
Of greater concern to the wider eurozone were big spikes in Spain's and Italy's borrowing costs when the bond markets opened for business.
The flight to the safety of German bunds reflected concerns among investors that those countries could be next to feel pressure to leave the single currency.
Greek yields rose sharply, with the rate on a 10-year bond topping 14%.
The Athens stock market was closed on Monday and could remain shut all week.
It was feared that capital controls imposed by Athens to staunch the flow of money out of Greek banks were likely to lead to a Greek exit from the euro.
They were announced after the European Central Bank confirmed it would not increase the limit on emergency funding for Greek banks beyond the €89bn already agreed.
The country's current bailout expires on Tuesday when Athens is due to make a €1.6bn debt repayment to the International Monetary Fund.
It could yet default on that payment.
(Sky News)
