Stocks in London and Europe plunged headlong into some of their biggest falls in years after the U.K. voted to leave the European Union.

Stocks in London and Europe plunged headlong into some of their biggest falls in years after the U.K. voted to leave the European Union.

As the day progressed, the market panic calmed down a bit and London's main FTSE 100 index recovered, closing with a loss of 3.2%. Earlier in the day it had plunged by nearly 9%.

But London's FTSE 250 index, which tracks 250 mid-sized companies, closed the day with a loss of 7.2%. Many analysts see the FTSE 250 as a more accurate reflection of the British economy because it tracks firms that do more of their business inside Britain.

The pound quickly dropped to its lowest level in more than 30 years against the U.S. dollar as the U.K. voting results came in. It's now trading around $1.36 after previously trading at $1.50 on Thursday evening.

Other European markets also plunged following the surprise result, with many posting larger losses than the London markets.

Germany's DAX index dropped by nearly 7%, while the French CAC plunged by 8%. Stocks in Ireland closed with a loss of nearly 8%.

The U.K. is the first country to vote to leave the European Union. Prime Minister David Cameron resigned after the vote, saying he will stay in the office for the next three months.

"The financial markets have certainly taken the view that the decision to leave the European Union is bad news for the United Kingdom in the near term at least," said Howard Archer, chief economist at IHS.