Euro markets plunge on recovery fears

The FTSE 100 was down more than 1.3% in early afternoon trading as weak data from China and ongoing fears for the US economy hit risk assets.

London's leading index extended earlier losses, with shares down 1.4% at 5,661 points shortly after 1.30pm.

European markets were also hit, with the French CAC40 down 1.7% and the German Dax slipping 1.4% lower.

Investor sentiment was hit in the wake of the US Federal Reserve's move to cut growth forecasts for 2011 by as much as 0.6% - to 2.7%.

Adding to fears for the global recovery was weaker-than-expected data from China, which showed factory-sector growth was close to stalling in June, leaving little incentive for investors to buy equities.

Meanwhile, Europe ministers are locked in discussions to finalise the latest bailout package for Greece.

They are now calls for holders of Greek debt to allow it to roll over, thus supporting any bailout plans.

However, the likelihood of this happening is still unknown, with many private holders potentially unwilling to continue to own what is already deeply discounted debt.