The FTSE 100 Index plunged more than 160 points today as the City reacted to the string of explosions in the capital.
The sell-off was particularly fierce in the transport sectors where shares of airlines and rail and bus operators were all sharply lower.
The Footsie gave up 160.9 points to stand at 5068.7 by mid-morning, while the pound lost nearly a cent to 1.74 against the US dollar.
British Airways was the heaviest faller in the top-flight, losing more than 8% or 22.5p at 250p, while airports operator BAA weakened 28.5p to 590.5p as traders feared a sharp drop-off in the number of passengers travelling to and from the UK.
Smaller carriers also suffered from the loss of confidence – led by easyJet which fell 8% or 20.5p at 244p.
Firms operating in the holidays and hotels sector were under heavy pressure with cruise giant Carnival down 196p at 2034p and InterContinental Hotels dropping 38p to 683.5p.
The prospect of a surge in insurance claims left blue-chip stocks such as Legal & General deeply in the red. L&G was off 4% or 4.75p at 110.5p while Norwich Union owner Aviva dropped 26p to 599p.
Shares in two major shareholders of Metronet, the consortium that runs a large amount of lines in the London Underground, were lower in the second tier. WS Atkins weakened 4% or 30p to 686p and Balfour Beatty lost 3% or 10.25p to 337p.
Other firms in the transport sector to come under pressure were bus operators National Express, down 6% or 52.5p at 858p, Stagecoach off 6p at 100.75p and Arriva down 17.5p at 528.5p.
Among the top 350 firms in the UK, only three were in positive territory.
They included retailer Matalan – up 1.25p at 180p – as it revealed plans to strip £15 million of costs from the business.
Washroom services specialist PHS advanced 8% or 8.5p to 114p after it received a £600.4 million takeover offer from its former private equity owner.