The FTSE 100 index closed 2% lower at 5,923 yesterday, wiping around £100bn off its value over the past four days as fears over Britain's potential exit from the EU intensify.
While the UK's blue chip index closed below the 6,000 mark for the first time since February, the CAC index in Paris fell 2.3%, and the German Dax was down 1.4%.
Sterling also hit a two month low yesterday, down 1.1% against the US dollar to $1.4108.
The falls across Europe come as recent opinion polls suggest a growing support for a 'leave' vote in the UK referendum on 23 June.
The Financial Times' Brexit poll tracker, which summarises public opinion polling, currently indicates a 47% support for a 'leave' vote against 44% for 'remain'.
This uncertainty also saw 10-year bunds issued by the German government hit negative yields for the first time yesterday, as investors flock to safe haven assets.
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Within the FTSE 100, mining shares were among the top fallers as concerns over the global economy continue to hit investor sentiment.
Housebuilders such as Taylor Wimpey and Barratt Developments also suffered falls as the state of the UK housing market in the event of a Brexit remains in question.
According to the BBC, a recent survey from Bank of America Merrill Lynch showed fund managers are holding more cash than at any time since 2001. It also indicated they have reduced the number of shares they own to four-year lows.
The Office for National Statistics revealed yesterday that inflation held steady at 0.3% in May, predicting a rebound following the referendum.
