Markets across Europe have continued to tumble after eurozone finance minister put off a decision on whether to release the next installment of Greece's bail-out. At a seven-hour meeting in Luxembourg yesterday, finance ministers agreed Greece could wait until November for the money – despite previous claims that it would run out of money this month. A meeting scheduled for 13 October has been cancelled. European stock markets fell sharply again this morning. The main share indexes in the United Kingdom, France, Italy and Spain were all down by more than 2 per cent. The DAX in Germany dropped just more than 3 per cent. The euro dropped to its lowest level against the dollar since January. The decision on whether to release the €8bn of financing to Greece – part of its first €110bn bail-out agreed last year – would now be taken after the troika of the European Commission, the European Central Bank and the International Monetary Fund had completed its report on Greece's progress, finance ministers said. Greece suffered a setback at the weekend when it had to admit that it would miss its deficit reduction targets for both this year and next, and said its economy would contract by more than previously predicted. Still, yesterday Eurogroup chairman Jean-Claude Juncker insisted that there was "no one advocating a default for Greece". Finance minister also discussed ways of increasing the power of the European Financial Stability Facility, the eurozone bail-out fund. There has been speculation that it could be leveraged to €2tn via the ECB, avoiding the need for the 17 members of the euro area to contribute more. The commission's economic chief Olli Rehn said: "We need a more flexible and powerful EFSF as a financial firewall to contain contagion." There were also hints that private bondholders would be asked to take bigger losses on Greek debt than the 21 per cent haircut set out on 21 July. At that summit, a second €159bn bail-out for Greece was agreed, including a contribution of €50bn from the private sector – but some countries including Germany want bondholders to take a bigger hit. Juncker said they had to "take into account that we have experienced changes since the decision." Finland's demand for collateral on Greek loans was accepted, under a complex arrangement devised by the EFSF chief executive Klaus Regling. As part of the deal, Finland will pay its €1.4bn contribution to the new European Stability Mechanism, a permanent replacement for the EFSF to be put in place in 2013, more quickly and at lower interest rates than other countries. Rehn said Regling deserved "the Nobel prize for economics or the Nobel peace prize" for coming up with the plan, which involves transferring Greek bonds from Greek banks to a trustee. Markets were not helped by the news that the Belgian cabinet was due to the break-up of the bank Dexia, which has come under pressure because of its exposure to Greek debt. The French and Belgian government have been asked to prop up the bank, which has seen its share price drop by more than a fifth. Meanwhile Germany's biggest bank Deutsche Bank has abandoned its profit targets and announced 500 job cuts. Its shares were down 6 per cent. And yesterday, the credit rating agency Standard & Poor's said there was a 40 per cent chance of a new recession in western Europe. European Union finance ministers continue their meetings in Luxembourg today.

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