The FTSE-100 has closed down 42.2 at 5040.8 - its lowest close since February.
Continued corporate worries and a lack of good news hit share values.
Traders warned that if the US markets close lower again tonight the Footsie could slide below the 5,000 mark tomorrow.
The last time the Footsie fell below 5,000 was in October.
Dealers blamed the negative sentiment on continued bad news.
Peter Cogliatti, head of foreign sales at Williams de Broe, said: "Investors are just losing heart a bit. While you wouldn't think people would sell at these levels there's nothing for anyone to hang onto."
Another trader said: "We are in a very volatile situation right now and a lot of people are very nervous. There is really not much in terms of good news right now and we have still got this nuclear threat between Pakistan and India looming."
In London, tech and telecoms stocks were bearing the brunt of the falls - pushing the techMARK - launched November 1999 - below the 1,000 mark for the first time.
Chip designer ARM Holdings contributed to the fall as it slid a further 8%, adding to Wednesday's heavy slide after patent worries and a negative broker review hit the group. Shares were down 15½p at 172p.
The fall fuels the prospect it may drop out of the FTSE 100 in the next quarterly reshuffle.