European stocks extended their early losses Tuesday, suffering their biggest one-day sell-off in six weeks after Greek prime minister called a referendum on the latest bailout deal, risking a new euro zone crisis.

At 0831 GMT (4:31 a.m. EDT), the FTSEurofirst 300 <.FTEU3> index of top European shares was down 2.8 percent at 968.30 points, with Societe Generale (SOGN.PA) down 12 percent and Credit Agricole (CAGR.PA) down 11 percent.

The Euro STOXX 50 volatility index <.V2TX>, Europe's main barometer of anxiety known as VSTOXX index, jumped 20 percent, hitting a more than one-week high.

Euro zone banks were hammered, with UniCredit (CRDI.MI) down 4.8 percent and Credit Agricole (CAGR.PA) down 8 percent.

The risk is that a 'no' from the Greeks will completely derail the rescue efforts. With the vote due in January, we can kiss the year-end rally goodbye, a Paris-based trader said.

Miners also took a beating, with Xstrata (XTA.L) down 4.7 percent and BHP Billiton (BLT.L) down 3.1 percent.