By msnbc.com news services
Wall Street looks set to follow European markets lower Tuesday, as investors fret over a surprise decision by the Greek Prime Minister to call a referendum on last week's new bailout package for the debt-stricken country.
George Papandreou shocked markets late Monday by announcing that a plebiscite will be held after a confidence vote in the government takes place at the end of this week. Should the government pass the Parliamentary hurdle, the referendum is expected to be held early in the new year.
Eurozone leaders agreed last week that private holders of Greek bonds should take a 50 percent loss on their holdings. News that Greece's Finance Minister Evangelos Venizelos went to a clinic after suffering stomach pains added to the renewed bout of fears in the markets.
In Europe, the FTSE 100 index of leading British shares fell 3 percent, while Germany's DAX slid 4.4 percent. The CAC-40 in France was 4.3 percent lower. Unsurprisingly, Greek shares fared worse, with the main exchange in Athens down 6.3 percent.
U.S. stock index futures indicate that Wall Street is poised for a second day of big falls Tuesday. On Monday, sentiment was already turning sour after U.S. brokerage firm MF Global filed for bankruptcy amid reports that it had bought too much bad European debt and fears over the public finances of Italy, the eurozone's third-largest economy.
As well as monitoring the turn of events in Europe, investors have a raft of economic news to digest this week, culminating in Friday's monthly jobs report.
The Associated Press and Reuters contributed to this report.