France's CAC 40 index plunged 2% on Tuesday as analysts assessed the potential for a fresh period of political instability.

France's minority government looked increasingly likely to be ousted next month after three main opposition parties said they would not back a confidence vote which Prime Minister Francois Bayrou announced for September 8 over his plans for sweeping budget cuts.

Bayrou seeks a confidence vote for €43.8 billion budget cuts in early September, risking another cabinet collapse if opposition parties follow through on threats to vote against him. View on euronews