Fears that the European Central Bank is scaling back emergency support to eurozone banks too soon sparked sharp falls in financial markets on Tuesday, with the euro tumbling to an eight-and-a-half year low against the Japanese yen.

Bankers warned that the ECB's decision not to renew one-year loans to financial institutions had stoked concern about the ability of some eurozone banks to access interbank borrowing markets for funding.

Banks across the eurozone, and in Spain in particular, have found it hard to secure liquid funding in commercial markets. Spanish banks have been lobbying the ECB to ease the fallout from the expiry of the €442bn in one-year loans it made a year ago. The growing unease among investors spread from Europe to the US and sent share prices on Wall Street to their lowest in seven months. European interbank rates jumped to their highest for nine months.