Europe is having a no good, very bad day.

European equities markets saw a major sell-off, while EU leaders prepared to meet for an informal summit in Brussels. The euro fell and stuck below the important $1.26 benchmark.

In the lead up to the summit, analysts speculated that euro area common bonds ("eurobonds") would top the docket for discussion, with French President Francois Hollande, Spanish PM Mariano Rajoy, and Italian PM Mario Monti all prepared to face off against the anti-eurobond Angela Merkel.

They were also expected to discuss international aid for Spanish banks and titter over Greece.

Here are the major developments we've seen so far:

Now read...EUROBONDS: Your Quick Guide To The One Thing That Could Actually End The Euro Crisis >

Scroll down for live updates. We're updating regularly.

ORIGINAL (7:07 AM EDT): European shares are in free fall right now, with all major indices down about 2 percent or more.

A look at the carnage so far:

CAC 40: -2.1%

DAX: -1.8%

FTSE MIB: -3%

IBEX 35: -2.1%

Meanwhile, the euro is also getting killed, briefly dipping to $1.261 before recovering to about $1.266, its lowest value since 2010. Meanwhile, U.S. Treasuries are confirming this risk-off attitude, with yields rivaling lows seen late last year.

UPDATE I (10:30 AM EDT): The implosion is going nuclear.

Italy is now off a full 3.6 percent, and the CAC 40 is off 2.6 percent!

Meanwhile, the euro has hit its lowest value since August 2010, falling below $1.26 and breaking through earlier resistance that had kept it above that important benchmark. Just check out the EUR/USD trade so far today:

UPDATE II (11:30 AM EDT): European markets fell dramatically right into the close. A look at the miserable scoreboard:

FTSE 100: -2.35%

CAC 40: -2.59%

DAX: -2.22%

FTSE MIB: -3.7%

IBEX 35: -3.3%

The euro remains below $1.26.

This market carnage comes ahead of an informal—but highly anticipated—EU summit in Brussels today, where many leaders are likely to discuss reiterate arguments that the newest round of elections are a referendum on Greece's membership in the euro currency.

On the other hand, they'll also be discussing far more activist measures than we've seen them consider so far. Backing for eurobonds appears to be at an all-time high, with the staunch support of French President Francois Hollande. They are also likely to discuss international support for the troubled Spanish banking sector.

UPDATE III (12:30 PM EDT): Merkel confirmed that nothing will happen at today's EU summit, a conclusion that we had predicted earlier today.

According to Bloomberg, she reiterated her opposition to common euro area bonds and told reporters that leaders "will only exchange options" at today's meeting.

Our full preview...Here's What Will Happen At Today's Big EU Summit >

UPDATE IV (1:25 PM EDT): German newspaper Die Zeit reports that the European Central Bank has already set up a crisis committee to prepare for a possible Greek exit from the eurozone. According to that report, the group would be headed by German economist Joerg Asmussen, a member of the ECB's executive board.

UPDATE V (2:20 PM EDT): We've also been seeing chatter about the European Union offering Greece €50 billion to leave the euro quietly. That's from a Eurogroup working paper seen by Reuters (via ForexLive).

UPDATE VI (3:55 PM EDT): The latest market chatter is that Merkel is considering some kind of EU-wide guarantee program. This is an unconfirmed rumor, however, and indeed unlikely.

Meanwhile, Hollande told reporters (via @ItalianPolitics), "Eurobonds will be part of the discussion [at the summit today]. At the end of June, we will probably have a decision, but for the moment I think it is important that we can say what we think."

UPDATE (4:59 PM EDT): Citigroup Chief Economist Willem Buiter now predicts that Greece will leave the euro area on January 1, 2013. While he admits that this estimate is subject to change, he said his team's current assumption is that the country will leave the EMU early next year.

Watch this video explainer of the situation:

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Produced by Daniel Goodman