The sell-off has continued on world markets following the Brexit vote, with banks bearing the brunt of it.
Investors are dumping British stocks and the pound due to concern about what happens now Britain has voted to leave the European Union.
The European Stoxx 600 fell 4.1 percent.
London's FTSE 100 stock index closed 2.6 percent. The FTSE 250, which has many smaller companies and is more domestically focused, was down seven percent.
Germany fell three percent and France lost 1.86 percent.
But Spain's IBEX did better than expected. It fell 1.8 percent, after Spanish elections strengthened the conservative party of acting Prime Minister Mariano Rajoy.
On Wall St the Dow Jones Industrial Average closed down 1.5 percent. The S&P500 shed 1.81 percent and the tech-heavy Nasdaq fell 2.41 percent. Traders say in the final minutes of trading the index moved off their lows, with more buy orders at the close.
Europe's bank stocks index fell 7.7 per cent. It has now lost more than twenty percent of its value in two days. The index is now not much higher than the lows it reached during the Eurozone debt crisis of 2011.
Investors are particularly concerned about the banks.
Several investment firms have cut their price targets for the sector, warning that both UK and European lenders are at risk.
The Royal Bank of Scotland plunged 15 percent and Barclays tumbled 17 percent.
Deutsche Bank closed down six percent. UBS lost eight percent.
Investors are concerned about the banks for several reasons.
There is the obvious concern -- that a slowdown in the UK could harm the banks' profits.
Investors are worried that the uncertainty will dent consumer confidence and harm spending.
There is also concern about the prospect of lower interest rates. Lower rates will put pressure on the banks' already squeezed profit margins.
Then there is the worry that if Britain leaves the European Union the UK based banks will lose regulatory protections that allow them to work with clients on the European continent.
It was not just the banks that were sold off.
Airline EasyJet fell 22 percent to a three-year low after it issued a profit warning.
British Airways owner IAG fell 15.9 percent after Goldman Sachs cut its shares to "neutral".
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