The FTSE 100 Index has suffered its sharpest one-day fall in ten months as renewed fears over China's growth saw the London market extend its run of falls.
Gloomy manufacturing figures from the world's second biggest economy saw the index tumble 2.8 per cent, the largest one-day fall since October 15.
The FTSE 100 Index closed 180.2 points down at 6187.7, the lowest the level market has reached since December 15.
The top flight fell for a ninth day in a row, equalling a run of successive losses seen in November 2011.
The index is down 363 points this week, or 5.6 per cent, wiping £92.8 billion off the value of top-flight firms over the period.
Germany's Dax and France's Cac 40 both suffered similar falls of around three per cent. In New York the Dow Jones Industrial Average fell almost 300 points in early trading.
The declines came after Wall Street yesterday saw its worst session in 18 months on Thursday while there was another steep drop of four per cent for Shanghai's Composite Index.
Global markets have been spooked in recent weeks by China's slowing economy and the depreciation of the yuan as well as plunging commodity prices and fears over the timing of the next US interest rate hike.
The worries have seen the FTSE 100 officially enter "correction" territory more than 10% down from its all-time high of 7104 in April.
Latest fears over China came after a key manufacturing index for the country showed the sector's decline worsening, with performance at its lowest level in more than six years.
There is also renewed anxiety over debt-laden Greece after the resignation of prime minister Alexis Tsipras, likely to prompt snap elections, created doubts over its €86 billion (£62bn) bailout package.
In UK economic news, official figures showed public sector finances had posted a July surplus for the first time since 2012, boosted by a record £18.5bn take from income tax-related receipts.
However, the surplus of £1.3bn fell short of expectations of £2bn.
Sterling fell by a cent against the euro to just over 1.38 while it edged slightly down against the US dollar at a little below 1.57.
In London, technology firm ARM Holdings - whose chip designs help to power Apple products - was among the fallers, down two per cent after a note from brokers at Liberum cut forecasts for earnings.
Analysts said: "ARM is still a smartphone play and this market is slowing sharply." Shares fell 32.5p to 864.5p.
Drugs giant GlaxoSmithKline was in the spotlight after a deal worth up to $1 billion (£658m) to sell its remaining rights for use of the drug ofatumumab, for treating diseases such as multiple sclerosis, to Switzerland's Novartis.
Glaxo's shares failed to benefit, shedding more than three per cent, or 46p, to 1324.5p.
There was only one riser in the FTSE 100 Index, which was Royal Mail up 7.5p at 478.2p.
The biggest fallers in the FTSE 100 Index were Shire down 268p at 4807p, CRH down 89p at 1806p, easyJet down 78p at 1624p and Carnival down 149p at 3209p.
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