Markets 'show Greek rescue plan inadequate'

Global financial markets have deemed rescues plan for Greece inadequate, Australia Prime Minister Kevin Rudd said as stocks tumbled around the globe.

The Australian market lost almost three percent in early trade after US and European markets fell overnight, and Rudd said the government was watching developments to restore market confidence with "considerable concern".

"Markets have judged those arrangements to be inadequate," Rudd said, after the European Union and IMF announced a 100 billion euro bailout for Greece, which is struggling to quell concerns about its sovereign debt.

Rudd said financial instability would be the dominant issue on the agenda at the Group of 20 leaders' meeting in Canada in June.

"Stability of financial markets will be at the core of the agenda again," Rudd said in a radio interview.

"We now have a mechanism to effectively respond to events like we see in Greece at the G20." Rudd said the Australian economy was well placed to deal with external shocks.