Europe's stock markets slid in early deals on Thursday after the European Central Bank moved to restrict Greek banks' access to a key source of cash.
London's benchmark FTSE 100 index dropped 0.52 percent to 6,824.00 points, Frankfurt's DAX 30 dipped 0.30 percent to 10,878 points and the CAC 40 in Paris fell 0.62 percent to 4,667.81 compared with Wednesday's close.
The Greek stock market meanwhile plunged more than nine percent in early deals before recovering some of its losses.
"The FTSE has opened sharply lower in early trading following the ECB announcement last night that it will no longer accept Greek bonds as collateral for loans to its commercial banks," said Andy McLevey, head of dealing at online broker Interactive Investor.
In an announcement late Wednesday, the ECB said it would no longer allow Greek banks to use government debt as collateral for loans.
Greek debt has a junk credit rating and, under ECB rules, should not qualify as collateral.
But Greece had been granted a waiver because of the country's dire economic situation. The ECB's decision to take away that measure is seen as adding extra pressure to Greece's new government to strike a deal on the massive debts stemming from its international bailout.
"The European Central Bank said it would not accept Greek bonds as collateral -- a robust early response to Athens' efforts to renegotiate bailout terms with creditors," added ETX Capital analyst Daniel Sugarman.
European equities had wobbled on Wednesday as traders tracked Greece's efforts to renegotiate its debts.