BILLIONS of euro were wiped off the value of leading European shares indices today as fears intensified that Greece will crash out of the euro.

Another day of turmoil on world markets saw London’s FTSE 100 Index close 2pc, or 110 points, lower at 5465.5 as attempts to form a coalition government in Greece continued to stutter.

That left the country facing the prospect of another election next month, putting its future in the eurozone in increasing doubt.

Banking shares were hit while Germany's Dax and France's Cac-40 were both down about 2pc while in Spain, the IBEX fell 2.7pc.

In Greece, the leader of the country’s left-wing party which came second in this month’s elections, Alexis Tsipras, has so-far prevented an coalition government being formed with his refusal to agree to EU/IMF/ECB austerity measures.

Analysts said the uncertainty could ultimately lead to Greece leaving the single currency.

As European Finance Ministers gathered in Brussels for a summit, German minister Wolfgang Schaeuble said there was no easy way for Greece or the Greek people.

"The price if they decide to leave the euro is very high" and "would cause a huge amount of turbulence for all of us".

The big question is whether the eurozone could contain the fallout of such a move, analysts said.

As contagion spread, the cost of borrowing for Spain hit 2012 highs as yields on 10-year bonds hit 6.331pc.

Finance Minister Michael Noonan, who was also speaking in Brussels, added that he would like Greece to stay in the eurozone but the country would have to stick to its commitments under the EU/IMF/ECB rescue programme.

He said that any proposals to lend support to Spanish banks in a way that did not convert bank debt into public debt could be “interesting” from an Irish perspective.

Mr Noonan said such a proposal could offer a parallel for Ireland in relation to the over €30bn in Anglo Irish debt known as promissory notes or IOUs.

Meanwhile, Taoiseach Enda Kenny has shot down renewed calls for the referendum on the European fiscal treaty to be postponed.

He rejected claims from a group of independent politicians that uncertainty in France and Germany, and potential revisions to the treaty text mean it is too soon for the Irish people to cast their vote.

"The date is fixed for May 31," he said.

"The reason it's important we leave it at May 31 is that it allows us to send out a very clear signal of certainty from our people, about our country."

The Taoiseach said sticking to the original referendum date shows potential investors that Ireland is serious about being part of the eurozone.

"We can send out a very clear and strong signal about where Ireland is headed," Mr Kenny added.

"We know we are headed in the right direction and secondly, as a country in a programme, investors who are considering our country now will see the symbol of certainty and can make their decisions accordingly."

Earlier, Independent MEP Marian Harkin said the referendum should be deferred due to game-changing events in Europe last week.

She said Ireland was in no position to vote on whether to ratify the fiscal deal until potential revisions, including a new growth stimulus, are written into the text.

Ms Harkin also pointed out that if one of the main architects of the treaty - Germany - was unable to ratify it in parliament with majority support, Ireland should hold back from voting.

German Chancellor Angela Merkel was forced to defer the ratification of the fiscal compact because she failed to drum up enough support from parliament.

"I think what happened last week was a game-changer. We had the German parliament unable to ratify the fiscal treaty," said Ms Harkin.

The MEP, who intends to vote Yes in the referendum, said it was important growth measures suggested by French president-elect Francois Hollande are stitched tightly into an amended version of the deal.

Independent TDs Finian McGrath, Mattie McGrath, Catherine Murphy, Maureen O'Sullivan, Shane Ross and Stephen Donnelly joined Ms Harkin in her calls for a postponement.

Mr McGrath said the Government owes it to the public to allow them to cast their vote only once fully informed of the details of the treaty.

"There are three sides to this debate," said Mr McGrath.

"The Yes and the No and the people who want to know all the facts before they make a decision."

The finer points, including the new growth and jobs measures that are likely to be tacked on, will not be discussed until a summit of European leaders on May 23, followed by another in June.

The independents have called for the referendum to be deferred until autumn.

Telegraph.co.uk