A stock market bloodbath saw the FTSE 100 Index nosedive by 5.5% today as fears of a US recession sparked a global sell-off.
The Footsie plummeted by 323.5 points to close at 5578.2 - its biggest one-day points drop since the September 11 terrorist attacks in 2001.
Shares across Europe also dived and Asian stock markets suffered heavy overnight losses as fears over the health of the world's biggest economy swept through markets across the globe.
The falls followed Friday's falls for the Dow Jones Industrial Average on Wall Street, when investors were left unimpressed by the US Government's tax-relief plans to spur on the economy.
Rumours that Bank of China may become the latest banking giant to reveal a financial hit from the collapse of America's sub-prime mortgage market also tested investor nerves.
The US stock market was closed for the Martin Luther King one-day holiday, but traders suggested America would be playing catch up when it reopens tomorrow, which could lead to further volatility.
Heavily-weighted banking and mining stocks were worst hit as concerns over a US economic slowdown gathered pace.
HSBC and Royal Bank of Scotland - both with heavy exposure to the US economy - each saw significant losses, falling 48.5p to 712p and 30.5p to 342.75p respectively.
Miners also lost out after a rumoured fresh offer from BHP Billiton for Rio Tinto failed to materialise. Bid target Rio fell 472p to 4228p, while BHP slipped 143p to 1235p.
Peer Vedanta Resources - off 141p at 1591p - also suffered as concerns over faltering global growth weighed on the sector.
Plumbing and heating giant Wolseley was among the early Footsie fallers, losing almost 9% after the company warned of a deteriorating US housing market and falling profits. The firm recovered some lost ground however as the session wore on, to stand 26.5p lower at 689.5p at the close.
Insurer Standard Life meanwhile was on the back foot amid reports that Trevor Matthews, its head of UK life and pensions, was being lined up as the new chief executive of Friends Provident, currently a bid target for a US private equity firm.
While it is thought that Mr Matthews turned down the job last week, shares in Standard Life still slipped 8.25p to 203.5p.
Insurer Friends Provident was one of only four blue chip firms in positive territory after JC Flowers said it was eyeing a reported £4.1bn (€5.5bn) takeover. This pushed shares up almost 4%, or 5.5p, to 158p.
In the second tier, Northern Rock led the risers board as the market reacted positively to plans for a private sector rescue for the mortgage lender.
Shares were up more than 46%, or 29.75p, to 94.25p, with the Government's proposed financial support package significantly boosting hopes of avoiding nationalisation.
The only Footsie risers were Friends Provident up 5.5p at 158p, Taylor Wimpey ahead 2.6p at 183.7p, Hammerson up 2p at 1056p and Resolution up 0.5p at 712p.
The biggest Footsie fallers were BHP Billiton down 143p at 1235p, Rio Tinto off 472p at 4228p, Kazakhmys down 114p at 1041p and Anglo American down 238p at 2353p.