Stock markets in Europe are plunging following reports on Monday that Greek Prime Minister George Papandreou will put the recent Eurozone debt rescue deal to a referendum for Greek voters, a referendum the populace is likely to defeat.

As of 8:40 a.m. (New York time), the FTSE-100 index of Britain is down about 3 percent, while the DAX of Germany and CAC-40 of France have plummeted in excess of 5 percent.

Bank shares are incurring the worst losses. French banks Credit Agricole, Societe Generale and BNP Paribas --all of which are believed to be heavily exposed to Greek debt-- are down more than 10 percent.

Stock futures in the U.S. are also plunging, suggesting a large sell-off is likely.

The euro is also down about 1 percent against the U.S. dollar

At the Brussels summit last week, leaders of the Eurozone reached a deal to shave Greece’s mountain of debt by compelling holders of Greek securities to take a 50 percent loss, or haircut.

European officials --including Papandreou-- hailed the agreement, but his decision to put the measure to a referendum annoyed other heads of state, particularly French President Nicolas Sarkozy and German Chancellor Angela Merkel.

Merkel and Sarkozy are expected to discuss the Greek referendum by telephone.

A member of Merkel's coalition in Germany, Rainer Bruederle, angrily told German radio: The [Greek] prime minister had [agreed] to a rescue package that benefited his country.”

Italy’s Prime Minister Silvio Berlusconi told the upcoming poll in Athens was an unexpected decision that generates uncertainties.

Even worse is that no exact date has been established for the referendum, which adds even more uncertainty to the market.

Most opinion polls suggest that the Greek public, already mired in a deep economic recession and huge spending cuts, won't vote in favor of the new deal. Greek opposition parties are also adamantly opposed to the rescue package.

Christopher Pissarides, a Nobel Prize-winning economist told the media: If there is a 'no' vote, Greece would immediately declare bankruptcy. I do not see how Greece could remain in the euro.