US gloom and concerns over soaring oil prices sent the FTSE 100 Index plunging into the red today.
The blue-chip index lost almost 1.5% after early falls on Wall Street as more evidence of the meltdown in the US housing market emerged.
The Footsie closed 87.1 points down at 5766.4 as US figures showed repossessions leapt to an all-time high in the final three months of 2007.
Oil prices also hit a new peak of nearly US$106 a barrel as the Bank of England and the European Central Bank kept interest rates on hold, putting further pressure on the ailing dollar.
The pound was trading at higher than $2, while the euro also reached a new high against the greenback.
British Airways led the London market lower amid the concerns over oil prices as the flagship carrier warned its fuel bill could increase to £2.5bn (€3.26bn) in the next financial year.
BA was the biggest casualty of the session - off more than 7%, or 20p to 245p - as it also painted a gloomy picture of prospects.
Operating margins of 7% expected by the firm in 2008/09 contrast with the 10% likely to be achieved in the year to the end of this month.
The downbeat sentiment knocked budget airline easyJet, which fell 16p to 409.75p in the second tier, while in the top flight, cruise ship giant Carnival lost 68p to 1949p.
Banking stocks Royal Bank of Scotland and Barclays suffered setbacks meanwhile on the US gloom, falling by 13.75p to 341.25p and 20.5p to 427p respectively.
Among the retailers, Marks & Spencer was on the back foot after rival John Lewis warned of continued tough trading conditions this year.
John Lewis said sales growth at its department stores had dipped in the first five weeks of its new financial year. Marks' shares were down 11.5p to 389.75p as a result, losing 3%.
Energy provider International Power posted London's biggest improvement, up almost 7% or 24p to 385p, after it delivered a 17% rise in full-year operating profits thanks to contributions from acquisitions last year.
The numbers were in line with market expectations and with further positive results from power company E.on to cheer the sector, Centrica gained 4p to 322.5p, while British Energy advanced 18p to 565p.
Results from housebuilder Taylor Wimpey also recovered some ground through the session after dropping in early trading in the wake of cautious guidance for this year.
The company posted a full-year loss for 2007 after write-downs on land values in the US and Spain, but said cancellation rates had fallen in its main UK market. Shares were up 3.3p to 167.8p following a buy recommendation from Citigroup.
The Footsie's four biggest risers were International Power up 24p to 385p, British Energy up 18p to 565p, Tesco up 11.25p to 403p and Vedanta Resources which closed 58p better off at 2367p.
The four biggest fallers were British Airways down 20p to 245p, Old Mutual off 6.9p to 115.1p, Schroders down 48.5p to 957.5p and Compass off 16.5p to 332.75p.