London's FTSE 100 Index plunged more than 2% into the red today as recovery fears sent stock markets reeling worldwide.
Disappointing economic data in the US capped a poor session for investor sentiment, which took a battering overnight amid signs of slowing growth in China.
The Footsie closed 111.1 points down at 4805.8, with hefty falls also in early trading on Wall Street as the Dow Jones Industrial Average sunk more than 90 points.
The pound strengthened against the dollar as weak US jobs, housing and manufacturing data slammed the greenback, at $1.51, although sterling fell to €1.21 as European funding concerns eased.
Today's sharp slide for the Footsie marked an ominous start to third quarter trading after losing more than 13% in the previous three months.
As well as the China and US concerns, a move by ratings agency Moody's to put Spain on review of a possible downgrade was also behind the latest sell-off.
And a closely watched gauge of UK manufacturing activity likewise gave cause for concern that the bounce back from recession on these shores was faltering due to a eurozone blow to exports.
Financial and commodity stocks were suffering in London due to the growth concerns, with Barclays and Royal Bank of Scotland down 15.2p to 255.4p and 2p to 39.5p respectively.
Royal Dutch Shell was 77p lower at 1554p after it said it would lose 32,000 barrels of oil a day in the Gulf of Mexico due to the shutdown prompted by Hurricane Alex.
Rival BP was one of only two blue chip stocks to gain ground as it continued to benefit from speculation of takeover interest from Exxon Mobil and hopes that Russian partner TNK-BP may snap up some of its assets to help free up cash to cover its soaring Gulf of Mexico liabilities. Shares in the battered blue chip added 9.1p to 328p, a gain of almost 3%.
In the FTSE 250 Index, Tate & Lyle lifted after the industrial giant took the historic decision to sell its European sugar refining business, including its Golden Syrup factory in London, to American Sugar Refining for £211m (€255.9m).
With Tate now able to focus on higher margin businesses such as supplying sweeteners, starches and ethanol, shares rose 4.7p to 454.4p.
Department store chain Debenhams was also higher, up 2.1p to 55.1p, despite reporting a 0.4% drop in like-for-like sales in the 42 weeks to June 19.
Analysts said stronger margins and quicker than expected progress on a debt refinancing deal were behind the share price improvement.
Pubs and brewing firm Greene King meanwhile was 2.7p better at 395p after strong results and announcing plans to expand its Hungry Horse managed pubs business by more than 200 outlets.
The only Footsie risers were BP up 9.1p to 328p and Inmarsat ahead 1p at 715.5p.
The biggest Footsie fallers were Barclays down 15.2p at 255.4p, Investec down 24.4p to 429.2p, Randgold Resources off 345p to 6080p and Eurasian Natural Resources down 43p to 818p.