The FTSE 100 slipped further despite French and German leaders calling for "true economic governance" last night.
French president Nicolas Sarkozy and German chancellor Angela Merkel had sought to allay concerns about the eurozone by calling for a "step-by-step" process of economic integration.
Their decision to defer concrete moves towards 'eurobonds', which would see European debt underwritten by the entire eurozone, appears to have disappointed many investors.
By 11:00 BST the FTSE was down 0.7%, while the Dax and Cac 40 were down by 1.23% and 0.15% respectively.
Yesterday Bank of England governor Mervyn King highlighted the ongoing eurozone crisis, which focuses on doubts that countries like Greece, Italy and Spain will be able to service their debt, as a major risk to the UK economy.
"Recent developments in world stock markets and in the euro area are of particular concern," he wrote to chancellor George Osborne.
"Several member countries face substantial challenges in ensuring the sustainability of their fiscal positions and preserving the stability of their banking systems.
"There is a risk that this could lead to further severe stress and dislocation in financial markets and, were this risk to crystallise, it would have a significant impact on the UK economy."
According to Eurostat GDP data the eurozone economy grew by just 0.2% in the second quarter. Britain's economy grew by 0.1% in the same three-month period.