The Paris stock exchange lost over five percent of value and French financials were hammered late on Wednesday amid rumours that French banks were in serious difficulty.
France's second-largest bank, Société Générale, which holds significant amounts in Greek and Italian debt, saw its shares drop by 21 percent before closing down 14.7 percent late on Wednesday.
The FTSE fell 3.05 percent, in New York the Dow was down just over three percent, the CAC in Paris plunged 5.45 percent and the pan European Stoxx dropped 3.75 percent.
European and Wall Street shares had resumed their fall after a rebound on Tuesday on fears France could follow the US and lose its coveted AAA credit rating. However, there had been no warnings issued by any of the credit rating agencies.