Europe delayed the release of bailout funds to Greece on Tuesday, demanding Athens make more sacrifices and warning banks may have to share more of the pain in the crisis threatening theeurozone.
Stock markets tumbled after European finance ministers said Greece could wait until early November to receive 8.0 billion euros, the next installment of an EU-IMF 110-billion-euro bailout, held up since last month.
There was also mounting concern that the eurozone debt crisis may claim its first bank, with shares in Dexia plunging 37 percent on concerns it may collapse or be broken up.
Luxembourg premier Jean-Claude Juncker, who heads the group of eurozone finance ministers, called on Greece to agree "additional measures" with international auditors "to close any remaining gaps for 2013 and 2014."
Juncker also said a rescue fund to be used for a second Greek bailout, that was agreed in July but is now frozen with auditors demanding a three-year rewrite of Athens' spending plans, will be made more "efficient."
But he said ministers were not considering an increase in the size of the 440-billion-euro European Financial Stability Facility, as suggested by the United States and others.
Swedish Finance Minister Anders Borg warned that Greece risks missing budget targets demanded by creditors and said measures need to be taken to protect Europe, including a possible restructuring of banks.
"It is quite clear that there is an evident risk that the Greek programme is off track," Borg told reporters. "We have to rethink how we can move faster forward towards backstops and firewalls to handle the situation."
The delay in unblocking the 8.0 billion euros, originally set for release in September, prompted Greek Finance Minister Evengelos Venizelos to suggest Athens was being made a "scapegoat" for wider eurozone debt troubles.
Venizelos however was sent back to the drawing board to secure creditors' agreement on a new massive overhaul of the rapidly shrinking Greek economy, and enable a final decision on the loan funding before the end of October.
A decision on the aid to Greece is expected before an EU summit on October 17-18.
"I thought that we would need to take a decision because Greece had pressing needs, but we are told that it is for the beginning of November," said Belgian Finance Minister Didier Reynders.
He said the ministers are waiting for a report from the "troika" of auditors in Greece -- the European Commission, the European Central Bank and the International Monetary Fund.
Global pressure is now on to resolve the problems before G20 leaders meet in Cannes, France, on November 3-4, after a warm-up gathering of finance ministers in Paris on October 14-15.
There was also bad news for Greece's private sector creditors whom Juncker warned to expect greater losses on their Greek sovereign debt holdings than the 21 percent haircut already agreed in July.
The private sector agreed to participate in a second bailout of Greece, with the eurozone and IMF providing 109 billion euros in new funds.
"As far as PSI (private sector involvement) is concerned, we have to take into account that we have experienced changes since the decision we have taken on July 21," the Luxembourg premier said.
This would be bad news for European banks, many of which have extensive holdings of Greek sovereign debt, and some governments are worrying about how much they will have to give their banks in the event of a Greek default.
Shares in Dexia plunged by 37 percent in Tuesday trading when the bank's directors indicated it may need major restructuring, prompting France and Belgium to pledge to guarantee its debts.
"Dexia's problems stress the point that for eurozone leaders the Greek crisis is less about Greece and more about the potential for it to spark a much more widespread banking and economic disaster," said Rabobank analyst Jane Foley.
Stock markets closed down in Asia and tumbled as they opened across Europe on Tuesday morning, from falls of 3.40 percent in Hong Kong and 1.05 percent in Tokyo and drops of 3.5 percent in Frankfurt and 2.6 percent in London.
The euro struck a near nine-month low against the dollar and 10-year nadir versus the yen.
Japanese Finance Minister Jun Azumi called for the swift and transparent passage of the new Greek rescue package, to reassure markets and help stem the yen's recent surge against the euro.
"The sense of uncertainty cannot be wiped out unless (euro member states) clearly show the market they are swiftly implementing the assistance scheme for Greece."
Meanwhile Klaus Regling, the head of the EFSF, will explore further ideas on how to ramp up the effectiveness of the fund, after broad discussions about possible "leveraging" to multiply its firepower.
The United States and other major economies want money to keep flowing into Athens, to avoid a default they fear could trigger global recession.