“Investors still get nightmares from the events of 2008 and nobody wants to see an encore,”Bloomberg quoted Platypus Asset Management’s Prasad Patkar as saying.

“Europe has the potential to set off another global credit crisis, which is the biggest worry.”

Athens was hit by protests overnight, as opposition to further budget cuts grow and continue to destabilise the Greek government.

There are also continued worries over the health of the US economy after New York manufacturing dropped in May.

The S&P/ASX 200 fell 1.9%, or 87.6 points, to 4479.2, while Tokyo’s Nikkei 225 and Hong Kong’s Hang Seng posted similar drops.

All sectors were lower, but Basic Materials was the worst performer, down 2.4%.

BHP Billiton fell 2.1%, or A89c, to $42, Rio Tinto dropped 2.1%, or $1.68, to $78.40, and Fortescue Metals Group shed 4.4%, or 28c, to $6.02.

Murchison Metals slumped 9.5%, or 7.5c, to 71.5c, Mirabela Nickel dropped 6.8%, or 12.5c, to $1.70 and Aquarius Platinum closed 7.7%, or 38c, lower at $4.60.

Of the top stocks, Equinox Minerals was the only gainer, rising 8c to $7.88, though it is now majority owned by Barrick Gold and is soon to be delisted from the Australian Securities Exchange.

On the smaller end of the market, Adelaide Resources plummeted 20.8%, or 2.5c, to 9.5c after withdrawing the initial public offering of its spin-off company Peninsula Resources.

After dropping 15% yesterday, Catalpa Resources regained some ground, closing 3.5%, or 5c, higher to $1.49, while its future partner Conquest Mining fell 4.6%, or 2c, to 41c.

Meanwhile, St Barbara closed 4.9%, or 9.5c, down to $1.86 after saying it was reviewing its position in regard to the proposed Catalpa-Conquest merger.