The Footsie index of 100 leading stocks has fallen 93.6 points by mid-morning to stand at 5673 as technology and telecoms shares go into freefall.
The falls comes after Cisco Systems, the world's largest networking equipment company, warned of a sharp shortfall in revenues and earnings after the close of trading on Wall Street.
It also announced plans to axe a quarter of its global workforce, blaming the decision on the economic slowdown in the US, as well as softer demand in Asia and parts of Europe.
Among telecoms sufferers on the London Stock Exchange are Vodafone, dropping 13p to 203p; BT, down 36p to 540p; Colt Telecom, 64p lighter at 646p; and Cable & Wireless, 31½p off at 483½p.
Telecom equipment group Marconi is down 27½p to 307p; Energis has fallen 32p to 269p; and Spirent has slipped ¼p to 348p.
Software groups Sage and Misys are also lower, off 19¾p at 223p and 39p at 431p respectively.
And computer services group Dimension Data has fallen 10% or 28¼p to 260p; Logica has tumbled 70p to 812p; and CMG has fallen 33½p to 402p. Meanwhile, chip designer ARM Holdings has fallen 21p to 306p.
Footsie 250 stocks are also suffering, with Baltimore Technologies down 9p at 65p; handheld computer group Psion off 12¾p at 93½p; and Bookham Technology down 21½p at 293½p.
Oil stocks are showing little impact from the explosion at the Conoco oil refinery in Lincolnshire yesterday. Shares in BP Amoco are up 8p at 608½p; while Shell has moved ahead 6p to 576p.
Old economy shares are gaining, with Marks & Spencer up 4p to 263p; Tesco up 4p at 254½p; Morrison Supermarkets rising 4¼p to 263¼p; and Kingfisher 3½p higher at 457½p. United Utilities is up 12p at 622p; Scottish & Southern Energy has risen by 5p to 613p; and Centrica is up 3p to 236¾p.