The FTSE 100 Index dived into the red today as political tensions around the world and soaring oil prices weighed heavily on global stock markets.
The Footsie sank almost 110 points at one stage before recovering slightly to close the day 95.6 points lower at 5765.
It mirrored heavy falls around the world with the Dow Jones Industrial Average off more than 80 points when trading in London closed.
The sell-off came as investors were spooked by the prospect of interest rate hikes in Japan, as well as inflationary fears in the United States and growing tensions in the Middle East, which sent the price of oil up to record levels.
The miners led the way down as copper prices eased and investors looked to book profits. Vedanta Resources topped the fallers board with losses of 74p to 1336p or 5%, while Lonmin dipped 128p to 2777p, BHP Billiton was off 43p to 1051p, and Antofagasta sank 16.75p lower to 428.75p.
Norwich Union owner Aviva was also on the slide as it lost 23p to 690p despite reporting a strong first half trading performance.
It also announced it is to buy US life insurer AmerUs for $2.9bn (£1.6bn/€2.29bn) in a deal that will boost the UK firm’s presence in the States, but analysts believe Aviva has overpaid.
Other insurers also suffered in the sell-off with Prudential losing 16.5p to 559p and Legal & General off 4.25p to 123.5p.
Bucking the trend, Scottish & Southern Energy gained a penny to 1155p, following the news yesterday that it has taken a stake in a £400m (€580.76m) project to build a power plant capable of serving up to one million homes.
But InterContinental gave up early gains to close 13p lower at 941p after it announced it is to sell seven hotels in Europe for £440m (€638.95m).
The group, which owns the Holiday Inn and Crowne Plaza brands, said it will manage the hotels under 30-year contracts following the sale to Morgan Stanley Real Estate Funds.
Outside the top flight, 15% was wiped off media group Emap’s shares after it warned underlying revenues were being hit by difficult trading conditions.
The company said circulation had grown at the weekly titles, such as Grazia, in its UK consumer magazine division but had declined for men’s and car magazines. Shares fell 125p to 712p.
And music house EMI lost 9% or 28.25p to 277.75p after a European Court ruling cast doubt on the future of the company’s merger talks with Warner Music. The pair are engaged in a duel to buy each other.
Insurer Jardine Lloyd Thompson Group lost 10% or 39.5p to 350p after insurance broker Heath Lambert Group said it had ended takeover talks with the firm. Shares had risen 16% on the back of the talks.
The day’s biggest blue chip risers were Tesco up 3p to 345p, Reckitt Benckiser up 13p to 2076p, Smith & Nephew 2.25p stronger at 415p and National Grid 2p up at 590p.
The heaviest fallers were Vedanta down 74p to 1336p, Old Mutual off 8.5p to 155.25p, Sage down 10.5p to 214p and Lonmin 128p lower at 2777p.