Eurozone crisis live: Stock markets slide as violence mars Greek strike - as it happened

One more thing....Italy's technocratic prime minister, Mario Monti, has told the United Nations General Assembly that Europe is facing "the worst crisis in its history".

So we'd better all get some rest ready for tomorrow.

Many thanks for reading, commenting, and helping. Good night!

Wall Street closed in the red for the second day running, with the Dow Jones index finishing 44 points lower at 13413.

At this early stage, stock market experts expect the FTSE to open unchanged in London tomorrow morning;

Herman Van Rompuy, President of the European Council, told the United Nations tonight that Europe would emerge from the crisis in stronger shape, both economically and politically.

The full speech, given to the 67th General Assembly of the UN, is online here. In it, Van Rompuy pointed to this summer's progress, while glossing over the cracks that have appeared in recent days.

He said:

No effort is spared to overcome the current difficulties in the Eurozone. We have been setting up stronger firewalls to guarantee the stability of our common currency; we are reforming our economies to become more competitive and create jobs for the future.

We have started building a banking union to better manage and contain financial sector risk; and in the coming months we will be defining the perspective for where we are headed, where we want our economic
and monetary Union to be in ten years' time.

We have come a long way already, and today we are seeing the first results of this collective endeavour. Although there is still some way to go, I am confident that these efforts will be met with success and that Europe will come out of this experience stronger, economically and politically.

On Wall Street, shares are down again with the Dow Jones 30 points lower at 13426 points in late trading (following yesterday's 101-point drop)

Also - the Vix Index (a measure of volatility, or investors' fears) is up 16% this week. That indicates growing worries about the crisis - but also reflects how relaxed traders had become.

Marketwatch explains:

One of the market’s measurements for investor sentiment suggests growing investor worry, but that doesn’t mean it’s time to panic....

While that’s arguably the case this week, it’s also worth noting that the index is bouncing back from rare lows last week. While unrest in Greece and Spain and a pullback in the U.S. markets have doubtless contributed to the VIX’s rise, this week’s climb is also due to last week’s drop.

Missed this fact earlier, but today's 91-point tumble on the FTSE 100 (17.39) has wiped more than £23bn off the value of Britain's blue-chip index (thanks, Daily Telegraph)

After a dramatic day in Greece, Helena Smith's news story about the events is now live on our website:

Hundreds of thousands of Greeks march against austerity

And Ian Traynor's article about the escalating concerns over the eurozone crisis is online too:

Eurozone crisis returns to rattle markets after period of calm

The man who runs the world's largest currency hedge fund has declared that the situation in the eurozone will probably get worse rather than better.

John Taylor, founder and CEO of FX Concepts, told Bloomberg TV that he will "probably always be a bear on the euro"

Taylor added:

It is hard to look at the European situation and see a cloudy sky become clear. Much more likely that cloudy sky will start to rain on you.

The full interview is online here

Prime minister Mariano Rajoy isn't there to hear it, but the message from the protesters in Madrid tonight is that they will not be cowed by the police response to yesterday's demonstrations (which ended with the crowds being baton-charged and rubber bullets being fired).

Over in New York, Spanish prime minister Mariano Rajoy has given a speech pledging to make fiscal and structural reforms, and warning that every level of Spanish society must make sacrifices.

Reuters has the key quote from Rajoy:

We know what we have to do, and since we know it, we're doing it. We also know this entails a lot of sacrifices distributed ... evenly throughout the Spanish society.

Those sacrifices could become clearer tomorrow when Spain announces its 2013 budget....

El Pais has got a live feed of this evening's demonstrations in Madrid, here.

The picture so far is that the demo is well-attended, and calm (can't actually get a screengrab into the blog, sorry #kickscomputer)

Crowds are back on the streets of Madrid tonight, for a second evening of protests.

Here are some pictures from the scene, via Twitter:

Back in Greece, photojournalist Mehran Khalili reports that the smell of teargas remains in the centre of Athens, hours after the protests ended:

This photo makes a similar point, showing a woman covering her face to protect from teargas as she walks by a damaged Citibank branch in Athens:

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Damian Mac Con Uladh, journalist for Athens News and the Irish Times, reports that other parts of Greece got on with life as usual today.

Just to complete the picture of misery in the eurozone today, the French unemployment total has broken through the three million mark for the first time in 13 years.

France's Labour ministry reported that the number of people registered out of work jumped by 32,900 in August - the 13th monthly rise in a row. That means there are 3,011m jobless in Europe's second largest economy.

Labour minister Michel Sapin pinned the blame firmly on the previous government of Nicolas Sarkozy:

It's bad, it's clearly bad. But...in reality these three million unemployed were here when we arrived in office.

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It's been a bad day in Europe's stock markets, with heavy losses across the boards. Particularly in Italy and Spain.

Pessimism is stalking the trading floors, as hopes built up through August and early September are blown away by the events in Spain and Greece today, and the apparent unravelling of Europe's plan to directly recapitalise struggling eurozone banks.

Here's the damage:

FTSE 100: down 91 points at 5768, - 1.5%

German DAX: down 148 points at 7276, -2%

French CAC: down 98 points at 3414, - 2.8%

Spanish IBEX: down 320 points at 7854, -3.9%

Italian FTSE MIB: down 524 points at 15408, -3.29%

Mike Ingram, market analyst at BGC Brokers, say the markets have finally woken up to the fact that the Eurozone is still in deep trouble and that the European Central Bank (ECB) can't get it to safety alone:

Ultimately, Ingram reckons, Europe must restructure more of its debt:

The issue at heart in Europe is ultimately quite simple; there is too much debt in Europe as a whole and not enough growth to service all of it. No matter how it is repackaged, much of it is not going to be repaid and creditors are going to take a hit. Fiscal sovereignty will be ceded in exchange. I think even politicians have realised this, if only conceptually. Unfortunately the political toxicity of the final destination merely serves to prolong the agony of their decision-making.
The ECB has done all it can, as has the IMF. It is now down to governments. It can’t wait for Spanish regional elections, or German Federal election or any national timetable. The time to act is now.
European politicians need to take heed from US Founding Father Benjamin Franklin when he said ‘We must, indeed, all hang together, or assuredly we shall all hang separately’. On present form, it’s debatable whether bond market vigilantes or today’s rioters in Madrid and Athens will settle the matter first.

Sony Kapoor of the ReDefine thinktank is also in gloomy mood -- and argues that the rest of us are catching up:

Greek newspaper Kathimerini reckons that 3,000 officers were on the street of Athens today to police the marches.

It also reports that Yiorgos Harisis, a unionist from the ADEDY public sector group, told demonstrators that they would bring down the Athens government:

Yesterday the Spaniards took to the streets, today it's us, tomorrow the Italians and the day after - all the people of Europe...

With this strike we are sending a strong message to the government and the troika that the measures will not pass even if voted in parliament, because the government's days are numbered.

The row/confusion/fiasco over whether Europe's new bailout fund will properly recapitalise its banks is a political headache for the Irish Republic's prime minister.

Ireland's Taoiseach Enda Kenny insisted today that a deal to ease the Republic's crippling bank debts is still on the cards -- despite three of European Finance Ministers appearing to hint yesterday that only future debt would be covered in the scheme.

Henry McDonald reports from Dublin:

Kenny had to fight off accusations from political opponents in Dublin that he had misread an offer made in the last EU summit in June that there would be a new European fund to help Ireland support its struggling banking system.

Finance ministers Wolfgang Schauble from Germany, Finland's Jutta Urpilainen and Dutch minister Jan Kees de Jager said yesterday in a statement that the emergency bailout fund - the European Stability Mechanism (ESM) - should have only a limited responsibility in the recapitalisation of banks in the EU. The programme would only cover
future bank debts such as the ones currently crippling Spain.

The Irish prime minister however said that the decisions taken at the EU summit on 29 June were “clear and unequivocal.”

Kenny said: “The decision taken by the European Council was made by the heads of governments of the 27.

"There was a very clear decision in two parts. One was to break the vicious circle between sovereign and bank debt. And two, to reflect on the capacity of Ireland to meet its debts, and that equal treatment would be given. Those decisions stand."

Back in June the Taoiseach portrayed the deal as a “seismic shift” in that would separate Irish sovereign debt from its domestic banking debts.

Two worrying developments for Greece over its financial programme this afternoon:

1) Greece's state run TV is making much of Fitch's latest views on the Greek economy, says Helena Smith in Athens.

According to the ratings agency far from being reduced Greece's debt is growing. The credit agency predicted that the country's debt-to-GDP ratio would increase from 164,9% in 2012 to 180,2% in 2014.

"The sustainability of Greek debt is still far from being assured," Paul Rawkins, Fitch's lead analyst for Greece was quoted as saying. He added that further contraction of the economy would see the debt-to-GDP ratio climbing in 2013 and 2014.

The agency foresees the Greek economy shrinking by 7 % this year and 3% in 2013 before it stabilises in 2014.

2) The news comes alongside another report that the International Monetary Fund is pushing for Greece's debts to be restructured before it puts more money into the country.

Reuters has pinned the blame on disputes between the IMF and European officials:

While strains between Greece and its would-be saviours have been evident, as significant are frictions among the lenders.

"The problem is not between the IMF and Athens, it's between the IMF and the EU," one Greek official said, speaking like others on condition of anonymity. That view was confirmed by sources familiar with thinking in Brussels and Washington.

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Here are new photos from Athens, showing the peaceful side of today's demonstration.

The protesters chanted slogans including "EU, IMF Out!" and ""We won't submit to the troika" as they marched on the parliament building in Syntagma.

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Reuters now estimates that around 70,000 people marched on the Athens parliament.

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Greece may be calm again, but Europe's stock markets remain deeply in the red this afternoon as fears over the eurocrisis persist (as explained at 11.13am).

The selloff is particularly severe in Spain and Italy, the two countries most at risk of losing the support of international lenders.

In London, the FTSE 100 is down 102 points at 5756, a drop of almost 1.5%. In Spain, the IBEX down 3.5% at 7890, a tumble of 287 points.

And in Italy, the FTSE MIB has fallen by 540 points to 15391, down 3.3%

Investors have raced for the safety of the US dollar (so unoriginal), pushing the euro down to $1.284. The oil price has also been hit, with a barrel of Brent crude down $1.3 at $109.1.

Gloom abounds.

Analysts at Commerzbank summed it up in a research note.

The renewed escalation of the debt crisis in the euro zone, with violent protests in Spain against the planned new austerity measures, has sparked gloomier sentiment on the financial markets once again and is also putting oil prices under pressure.

Over in Italy, there is gloom following a report that Italian consumer spending is set to drop three percent year on year in 2012.

Our man Tom Kington has the story, based on a new study by Italian retailers’ group Confcommercio:

Confcommercio warns this is the biggest year on year drop since 1946, as Italy suffers from the downturn, as well from Mario Monti’s budget-balancing tax hikes which are hitting wallets hard.
Reacting to the news, Monti said he thought things could be worse. “That is not much compared to the intense cure which we have had to apply to the Italian economy,” he said.
Confcommercio added that consumer spending between the third quarter of 2007 and the second quarter of this year had plummeted by 6.5 percent, although spending on mobile phones and computers has held up. And while small stores are going out of business, large discount shops are resisting.
A report published by farmer’s group Coldiretti pointed to a seven percent drop in milk purchases in the first half of this year, and a five percent drop in olive oil.

In other bad news, La Repubblica reported on Wednesday that 1.42 million car purchases are expected this year, a million less than ten years ago and on par with 1979.
 
Perhaps the most dramatic stat is the 49.6% drop in new house mortgages registered in the first quarter of this year, while property sales were down 16.9%.
 
“We have already told our children that they will be worse off than us,” stated La Repubblica, “Now we discover that we are also going to be worse off than us.”

Here's some analysis of the events in Athens today, and Madrid last night, from Martin Koehring, economist at the Economist Intelligence Unit:

1) The ongoing austerity agenda in the crisis countries continues to have major social costs that are deemed unacceptable by large parts of the societies. The unemployment rate has risen to around 25% in both Greece and Spain (compared with around 11% in the euro area on average), while youth unemployment is above 50% in both countries. The Greek economy contracted by 17% since its pre-crisis peak in 2008, and the Spanish economy by more than 5%.

2) There are still huge political risks to the crisis resolution. In Spain, the government faces a backlash from separatist forces in the autonomous regions, especially Catalonia, as the Spanish government has used the crisis to recentralise powers. In Greece, the ruling three-party coalition is fragile and faces fierce opposition from anti-austerity and anti-establishment parties from both the far left and the far right.

3) Finally, the demonstrations remind us that central bankers cannot solve the crisis alone. The European Central Bank's plan to intervene in sovereign bond markets can only succeed if governments in crisis countries can convince their electorates that ongoing austerity and reform are necessary to avoid bankruptcy. This, however, is increasingly challenging without the return of economic growth.

And it's back to business on Ermou, Athens' main commercial thoroughfare, says Helena Smith who is out on the ground.

Helena tells me:

A lot of stores have re-opened with tourists wandering about with maps and shopping bags in hand. Many demonstrators are expressing disappointment with the strike saying unions are seriously over-estimating the numbers.

As young accountant who gave his name only as Vangelis told Helena:

If you think that there are over one million unemployed at least 300000 must live in Athens but there was nowhere near that turn-out...Isn't it odd that the violence erupted just when the work stoppage (among shopowners) was about to end?

Martin Newman, a British photographer who now lives in Athens, has also decided to pack it in for the day.

It was nothing like the protests we've seen. The violence was a whirlwind. It was over before you knew it.

Riot police with shields and tear gas canisters are, however, still lining Syntagma square, Helena adds.

Greek journalist Efthimia Efthimiou confirms that the demonstration is over:

Looking at the latest TV feed from Athens, the situation does appear calm again. Pictures of quiet roads, people walking normally, etc.

Barnaby Phillips, Al Jazeera correspondent, confirms this, saying traffic is running again in the city centre near parliament:

These photos from Athens show how the protests turned violent today. Reuters reports that the molotov cocktails were thrown by 'hooded youths' who were on the sidelines of the (orderly) demonstration. That fits the pattern of previous demonstrations.

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Greek newspaper Kathimerini points out that Greek police have broken a restriction blocking them from using teargas:

It writes

Tension rose outside Parliament on Wednesday afternoon as hooded demonstrators launched Molotov cocktails at riot police forces. The latter responded with tear gas, despite orders to refrain from using chemicals against protesters.

Our correspondent in Athens Helena Smith says unions are describing today's nationwide general strike as a "huge success."

The civil servants union, ADEDY, estimates that as many as 350,000 Greeks have taken to the streets across the country today in a mass outpouring of protests against further austerity measures.

Helena writes:

Ilias Iliopoulos, a leading figure at ADEDY, Greece's union of civil servants, has just told me: 

“This is a warning to the government not to pass the measures.Today was a huge success as witnessed by all those in the armed forces and police who also participated because they, too, will be affected by these cuts. The government must know that if wants to push us further into a corner, we will react.”

Prime Minister Antonis Samaras’ conservative- led alliance is expected to decide tomorrow on budget cuts amounting to a whopping €11.9 bn, over 5 % of the country’s GDP. Once endorsed, the controversial austerity package will be sent to the parliament for ratification.

“Once the Greek people learn exactly what the measures are there will be uproar,” said Iliopoulos who reckoned that some 200,000 demonstrators marched through Athens - police reports put the number closer to 25,000. “There will be mass protests.”

In Athens, Spyros Gkelis flags up that police in Syntagma Square are reorganising themselves now, having cleared the area:

But the protest against Greece's austerity programme is not over. Nearby, one group of left-wing activists is still marching:

Here's a much better image of the moments when the Athens protests turned violent, via James Mates, Europe Editor at ITV News.

On previous occasions of this sort, a relatively small group of rioters have been responsible for the violence (some Greeks even allege links to the riot police themselves), and it does appear again that most people are remaining calm.

Or as Dimitris Api puts it

Reuters reports that at least 50,000 people have taken to the streets of Athens today.

Smoke is rising over parts of the city, after one demonstrator set light to a bin

There are also reports that a tree has been set alight in Athens' National Garden.

And bangs continue to ring out over the city.

Live TV footage from Athens shows that groups of riot police are now moving through the streets, with large numbers of peaceful demonstrators also dispersing.

There are also shots of some protesters throwing objects at the police.

This page has a live feed.

And another feed from the Zougla TV station is here

Another liveblog reader on the streets of Athens confirms that the protests have turned violent in the last few minutes. @Finisterre76 reports that petrol bombs and sound grenades are being thrown:

The situation is escalating in Athens. In the last few minutes, police officers have used teargas on demonstrators, reportedly in response to petrol bombs and stones being thrown.

The live feed from Athens now shows petrol bombs cocktails thrown at police officers, and many people running for cover.

From Athens, Theodora Oikonomides reports that some police officers are carrying tear-gas equipment.

Theodora also reports that it's seriously hot in Athens today, and that the demonstration is larger than she (a veteran of these protests) expected.

My colleague Helena Smith is on the streets of Athens, and reports that police helicopters are flying overhead.

She also explains that the bullet proof barrier erected outside the Greek parliament (see 11.16am) was inspired by a similar fence used by French authorities in recent demonstrations.

Greek public order ministry officials apparently saw it and got it copied here. "It was much cheaper than having it imported," said one official.

The water cannons (mentioned at 10.53) are also new, Helena explains:

The coalition government is keen not to be seen to be heavy-handed during the protests that will mark today's strike. Prime minister Antonis Samaras' two junior lefitist partners say it is very important that Greeks are not stripped of their "democratic right" to demonstrate against measures that they deem to be unfair.

The confusion today over whether the European Stability Mechanism will be used for direct bank recaptalisations (see 11.13) has "all the makings of a fiasco", warns our Europe editor Ian Traynor.

He writes that the row may well puncture the weeks of calm engineered by Mario Draghi and the ECB. That's because the agreement to use the ECM to recapitalise banks directly appeared to be a real step forwards in fixing one of the root causes of the crisis.

Ian explains:

At their summit in June eurozone leaders pledged to break the invidious banks-sovereign loop which was weakening banks and worsening sovereign debt burdens.

The way to do this, they declared, was to allow the bailout fund (ESM) to shore up banks directly rather than going via governments and increasing debt levels. But the wording was left deliberately ambiguous and before the ink was dry on the statement, senior German officials, being grilled in Brussels by gobsmacked German journalists, were squirming and heavily qualifying the promise to shore up banks directly.

Tuesday's statement from the triple-A Germans, Dutch and Finns amounts to the strongest caveat yet, hugely delaying if not reversing the June promise. Apart from ruling out direct help for banks from pre-existing cases, it describes use of the ESM as a "longer-term" option and as a "last resort."

Besides, it insists that the new ECB bank supervisor has to be operational and seen to be effective before the ESM use can be triggered. A very long time, in other words. Germany in June insisted on the new ECB bank supervisor for eurozone banks. But it wants the ECB to supervise everyone else's banks, not the vast majority of German ones. It is stalling on establishing the supervisor. France's Europe minister, Bernard Cazeneuve, said in Brussels on Monday the supervisor had to be established "urgently". The Germans say the absolute opposite.

And without the supervisor, there can be no use of the ESM to help weak banks directly. Catch-22 or going round in circles, as a matter of policy.

And while eurozone officials go round in circles, the stock markets go down (FTSE 100 now down 68 points). The euro has also lost ground this morning, down half a cent at $1.286.

A bulletproof barrier has been erected outside the Athens parliament in preparation for today's protests:

There are signs of serious jitters in the City today. As feared, the yield on Spain's 10-year bonds has now risen about 6% (6.03% at pixel time). The stock markets are all still lower,, with Spain's IBEX down 2.66%.

There are several triggers for this sudden chill wind. The protests in Spain last night are certainly a factor – with analysts trying to assess whether the Spanish people have been pushed to the limit. Portugal's u-turn on its latest tax rises (which threatened a political crisis in Lisbon) has also served as a reminder that politicians are still answerable to the people.

Another factor is that the eurozone's commitment to recapitalise its banks through the European Stability Mechanism appears to be fraying. A statement last night from the finance ministers of Finland, Germany and the Netherlands appeared to reject some of the decisions made at last June's summit (great analysis here on FT Alphaville).

If legacy banking assets aren't going to included, how on earth with Spain and Ireland scrub their financial sectors clean?

The fear that Germany, the Netherlands and Finland have reneged on the deal has also hit Irish sovereign debt, pushing up the yield on its 10-year bonds to 5.213%.

As Peter Spiegel wrote in the FT today:

The need for Ireland and Spain to pump billions into their banking sector to keep them afloat forced otherwise fiscally prudent governments into eurozone bailout programmes with painful austerity measures that have exacerbated recessions.

Under the June deal, such bailouts would no longer be the responsibility of national governments but would shift to the eurozone rescue fund, the European Stability Mechanism, which was given the authority to inject capital directly into struggling banks. As part of the deal, Ireland was given a promise of equal treatment with Spain.

And the scenes in Athens are also a factor – a reminder that the public there, too, cannot be expected to swallow yet more austerity, especially when it is driving the economy ever lower.

Those in the City who had taken confidence in recent developments are now having a rethink:

Steve Collins, global head of dealing at London & Capital Asset Management, reports that clients are rushing to sell five and 10-year Spanish bonds.

These photos show thousands of supporters of the Greek Communist party marching past the Athens parliament this morning:

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Right now, there are three lines of riot policemen at the side of Syntagma Square:

The latest estimates from Greek police are that between 12,000 and 13,000 members of the Pame union group are on the streets, and another 2,000 to 3,000 from GSEE*.

Many more people, though, are not affiliated to either group, and will be taking part in the protests independently.

* - those figures are from Keep Talking Greece, which also reports that water cannons are on the street:

Police has deployed five water canons in downtown Athens in ‘order to limit the usage of tear gas’ should the situation get out of control.

As expected, parts of the Athens transport system are in limbo today, as this photo from the city's train station shows:

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A new photo from the centre of Athens shows that there are now large numbers of people congregated at Syntagma Square for today's protests:

That's via Spyros Gkelis, who is a great person to follow on Twitter for live updates, tweeting as @northaura .

As is Theodora Oikonomides, who tweets as @irategreek. She's on the streets of Athens, and also reports a heavy turnout:

Zougla, the Greek TV station, has a good live feed of events in Athens -- here.

Here are a couple of screengrabs:

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Germany's chancellor, Angela Merkel, will hold talks with IMF chief Christine Lagarde today.

Greece’s mass-selling Ta Nea newspaper is reporting this morning that the pair will try to solve the “Greek riddle.”
 
Helena Smith explains:

This comes against a backdrop of reports that Merkel and Lagarde are at odds over how to proceed with the debt-stricken country following clear evidence of what the IMF managing director has described as a “financing gap” in Athens’ EU-IMF-sponsored rescue program. Growing pressure from the Washington-based fund for a restructuring of Greece’s debt mountain – this time in the official sector i.e, by EU governments - has reportedly exacerbated tensions.

Meanwhile, fraught talks aimed at clinching a mammouth package of austerity cuts – at nearly €12bn the equivalent of 5% of GDP --- continue apace in Athens. According to the Greek media, the controversial measures were finally agreed at a marathon meeting last night between prime minister Antonis Samaras and the Greek finance minister Yiannis Stournaras.

“The package, according to reports, includes all the painful measures that existed in the government’s initial plan with the exception of firings in the public sector,” opined Ta Nea. “And the extra package of €2bn, which has also been sealed, will come from taxes.”

Regular readers will recall that that Athens’ conservative-led coalition has been battling to find an outstanding €2bn to close the package on which further disbursements of rescue funds depend. Samaras is expected to meet his junior coalition partners, the socialist Pasok leader Evangelos Venizelos and Fotis Kouvellis head of the Democratic Left party, tomorrow. During the talks all three men are expected to give the measures the green light.

It remains unclear, however, when the package will go to parliament to be ratified by lawmakers. What is certain, though, is that the Greek finance minister wants to present the cuts to his counterparts at the next euro group meeting of finance ministers on October 8.

The Bank of Spain has added to the gloom this morning by warning that Spanish GDP will fall sharply in the current financial quarter.

In its latest monthly statement, Spain's central bank said that Spanish GDP will probably fall at a "significant rate" in Q3 212.

Spain's prime minister has given a clear hint that he will bite the bullet and ask for financial help if Spanish borrowing costs become unacceptably high.

Speaking to the Wall Street Journal, Mariano Rajoy said:

I can assure you 100% that I would ask for this bailout [if necessary].

And on cue, Spanish sovereign debt is falling in value. The yield on its 10-year bonds (the benchmark for borrowing costs) has jumped to 5.94%, up from 5.77% overnight. Expect more jitters if it rises above 6%.

Via twitter, here's a photo of teachers aligned to the Pame union at the start of their protest march in Athens:

The banner reads: "No to the reduction of wages and pensions. The plutocracy should pay for the crisis." (thanks Helena!)

Shares have fallen across Europe, as the protests in Spain last night send jitters through the financial markets.

FTSE 100: down 52 points at 5807, -0.9%

German DAX: down 81 points at 7343, - 1.1%

French CAC: down 45 points at 3466, - 1.34%

Spain's IBEX: down 183 points at 7991, - 2.25%

Italy's FTSE MIB: down 301 points at 15630, -1.8%

As Michael Hewson of CMC Markets explains, the sight of protests on the streets of Madrid have added to the uncertainty over the situation in Spain:

Investors are becoming unsettled at what appears to be unfolding....

In a country that has an unemployment rate of 25% and a contracting economy it was a reminder, if any were needed, that Spain is swimming against the tide as it struggles to meet its obligations, and balance its budget. It can only be a matter of time before Spain is forced into a bailout request and it might need an external catalyst to provide it.

The union groups who have organised today's general strike argue that Greece simply cannot take further austerity (Helena Smith adds)

With unemployment at a record high – hitting almost 24% at a national level and 55% among young Greeks, the highest in Europe – and Greece in its fifth year of recession, they fear that the emphasis on deficit-cutting measures at the expense of growth and development is creating an economic death spiral.

As Stathis Anestis of the GSEE union group put it:

These policies have lead Greece to an impasse and are totally counter-productive.

There is also anger that EU, ECB and IMF are now pushing for further cuts in wages and pensions, (which have already drastically reduced in recent years), As well as proposing the introduction of a six-day working week, the Troika aim to cut the minimum wage by 22% and abolishing collective labour agreements – measures, unions say, that will roll back decades of hard-won workers’ rights.

The Living In Greece website has a great breakdown of how today's general strike will hit public services and transport links today - here (you need to scroll down to the September 26 section)

Our Athens correspondent Helena Smith says Greece’s general strike is underway as unions nationwide step up protests against the cutbacks being demanded of the country in return for more EU-IMF-funded rescue funds.
 
Helena writes:

This is the first mass confrontation with Greece’s three-month old coalition government and strikers say they are determined to give it their best. The industrial action is being backed by the General Confederation of Greek workers (GSEE), the country’s biggest private sector force, the union of civil servants, ADEDY, and militant unionists attached to the KKE communist party (whose organization is known as Pame). All three groups will hold mass demonstrations in Athens – and indeed some 65 cities nationwide – before protesters with the support of anti-bailout political forces from the far-left to far-right, march on the Greek parliament in Syntagma square [noon and after].

The mass action has brought the entire country to a standstill with state-run hospitals, schools and public services, government offices, habours, ports and indeed almost every form of transportation (bar trams and trolleys that will carry protestors to the centre of Athens) being paralysed. Flights at Athens’ International Airport have also been disrupted because of a walk-out by air traffic controllers until 1 PM local time.

Even tax collectors have said they will join in the action which has also closed archaeological sites, including the ancient Acropolis.

Supporters of the PAME union are expected to start gathering in Omonia Square at 10:30am local time (8.30am BST)
 
Private sector employees and civil servants will begin gathering at Athens’ main park, Pedio tou Areos, at 11am local time (9am BST).
 
Both groups will follow the main boulevards of Patission and Stadiou that run the length of the heart of Athens up to Syntagma Square - the scene of many protests since the crisis began.

Overnight, my colleague Giles Tremlett filed this news story on the Spanish protests. He explains that the violence began after the demo overran its official cut-off time:

Violence flared on Tuesday in the centre of Madrid as baton-wielding police charged crowds and fired rubber bullets at demonstrators who had tried to surround the country's parliament building.

Some 32 people were injured, including several police officers, and several dozen were arrested after police broke up the "surround the parliament" demonstration against Mariano Rajoy's government shortly after it overran its 9.30pm deadline.

Several hundred protesters remained peacefully on the streets near the parliament building late on Tuesday night. They are demanding the resignation of the government and the king, as well as a rewrite of Spain's constitution.

We also have a photo gallery of events here.

And the BBC reports that Spanish police targeted "ringleaders" behind the "Occupy Congress" movement. Their Tom Burridge writes:

The heavy-handed tactics of the Spanish police, with little provocation, perhaps show that the authorities were worried that this could have escalated.

The scuffles tonight in Madrid will make relatively dramatic images on television. Spain is still a place of mainly peaceful protest, even in the face of deep austerity. However tonight shows that even here, there is the potential for some, albeit for now limited, social unrest.

Good morning, and welcome to our rolling coverage of the eurozone financial crisis, and other key events in the global economy.

Coming up today... Greek prime minister Antonis Samaras faces his first general strike since becoming the country's leader. Widespread disruption is expected across Greece as people register their anger over the country's austerity programme.

The 24-hour strike has been called by the country’s two major union groups: GSEE and ADEDY. The scale of the industrial action will show the depth of public anger against Samaras's coalition government.

It comes as Athens officials continue to negotiate with its foreign creditors over a €12bn package of cuts, and amid growing speculation that the country is missing its financial targets and will need further cuts, or more debt relief.

We'll be tracking developments in Greece through the day.

We'll also be monitoring the aftermath of last night's protests in Madrid. As we covered in Tuesday's liveblog last night, riot police struck some demonstrators with batons and even fired rubber bullets, in some of the more worrying scenes since the eurozone crisis began.

The events in Madrid caused some alarm in the financial markets last night, where the Dow Jones index fell 101 points.