Molotov cocktails explode between riot police officers near Syntagma Square during a 24-hour labour strike September 26, 2012 in Athens, Greece. (Milos Bicanski/Getty Images)
ATHENS (AP) -- European markets were spooked Wednesday by scenes of violent protests on the streets of Athens and Madrid, which reignited concerns over Europe's ability to implement the measures needed to deal with its big debts.
A day after U.S. stocks suffered their biggest retreat in three months on comments from a leading official at the Federal Reserve, investors in Europe and Asia have grown jittery as the protests in Greece and Spain turned ugly.
In Athens, police clashed with protesters hurling petrol bombs and bottles in central Athens on Wednesday after an anti-government rally called as part of a general strike in Greece turned violent. Riot police used tear gas and pepper spray against several hundred demonstrators after the violence broke out near the country's parliament.
Protesters also set fire to trees in the National Gardens and used hammers to smash paving stones and marble panels to use as missiles against the riot police.
About 50,000 people joined the union-organized march in
central Athens, held during a general strike against new
austerity measures planned in the crisis-hit country.
The action, the first large-scale walk-out since the country's coalition government was formed in June, closed schools and disrupted flights and most services.
Everyone from shopkeepers and pharmacists to teachers, customs workers and car mechanics joined the demonstration, seen as a test of public tolerance
for more hardship after two years of harsh spending cuts and tax hikes.
In Spain, the Bank of Spain warned Wednesday that the country is in a deep recession, a day after clashes in Madrid between protesters and the police led to 38 people arrested and 64 injured.
The demonstrations on Tuesday evening against the government's
austerity drive at a time of mass unemployment put in sharp focus the scale of
discontent that's brewing in a country suffering its second recession in three
years and an unemployment rate of nearly 25%.
"The prospect that Spain might prove as truculent as Athens on the subject of reforms is a particularly uncomfortable one, since it risks making the Greek situation look like a mere sideshow," said Chris Beauchamp, market analyst at IG Index. "Oh, and the Greeks are on strike again, just to underline this point."
In Europe, Spain's IBEX index led the list of fallers, trading 3.3 percent lower at 7,903. Germany's DAX was 1.8% lower at 7,295 while the CAC-40 in France fell 2% at 3,443. The FTSE 100 index of leading British shares was down 1.2% at 5,787.
The euro was also down, further below $1.30, while oil prices retreated
toward $90 a barrel, more indications of investor unease.
The drop marked a sharp end to weeks of upbeat investor sentiment. Markets have been buoyant since the European Central Bank unveiled in August a plan to lower the borrowing rates of countries like Spain and Italy and prevent a breakup of the 17-country eurozone. Fresh stimulus measures from major central banks also boosted sentiment.
On Wall Street, the Dow Jones industrial average opened flat at 13,457 while the broader S&P 500 index fell 0.1 percent to 1,440.