The worries sent Spanish borrowing costs to a euro-era record level, with the 10-year bond yield climbing to 7.3pc, while the euro at one point fell to 94.61 against the yen, its lowest level since November 2000.
In Asia, Hong Kong's Hang Seng dropped 2.6pc, while Tokyo's Nikkei 225 shed 1.9pc, Australia's ASX Sydney slipped 1.7pc, South Korea's Kospi lost 1.7pc and China's Shanghai Composite slid 1.2pc.
Financial spreadbetters expect the FTSE 100 to open 0.8pc, Germany's DAX to fall as much as 1.1pc, and France's CAC-40 to drop 1.5pc.
"It's not the kind of situation where fears are just going to fade away, since the required amount of aid that Spain will need is likely to mount given the increasing needs of local governments," Rakuten Securities senior market analyst Masayuki Doshida told Dow Jones Newswires.
European leaders on Friday agreed to grant Spain's banks bailout cash of up to €100bn but despite this there are fears that the country will need extra cash to help service its debts.
The soaring yields on 10-year bonds come as unemployment sits at 24pc and the government tries to implement further austerity measures.
Without better economic news the country could lose access to debt markets, leading it to a bailout, which some analysts have said could cost up to $500bn.
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