Shares in Rolls-Royce slumped today after it issued its fifth profits warning in less than two years, blaming "sharply weaker demand".
The engine-maker saw shares fall by almost 20 per cent as it said profits in 2016 will be hit by £650 million of "headwinds" and revealed it would be cutting management jobs, while defence giant BAE Systems also said it was slashing jobs and reduced its earnings outlook.
Tumbling shares at Rolls-Royce and steep falls from mining stocks sent the FTSE 100 Index sharply into the red, down 118.5 points at 6178.7.
The Footsie's falls came as markets across Europe dropped despite comments from European Central Bank president Mario Draghi that suggested further monetary easing remains on the table in December.
France's Cac 40 in France was 1.7 per cent lower and the Dax in Germany fell 0.5 per cent.
The pound was slightly down against the US dollars at 1.52, as traders bet on a US rate hike next month. Sterling was also slightly lower against the euro at just over 1.41.
In London, Rolls-Royce plunged 130.5p to 536.5p after the profit alert, with the group saying the main areas where demand was weaker were "selected aerospace and offshore marine markets".
In July, it said a reduction in deliveries of its Trent 700 engine would affect profits in 2016 and 2017. It has released a series of profit warnings since February 2014.
BAE Systems shares shrugged off its earnings gloom, with the firm warning that up to 371 UK jobs will go as it slows production of its Typhoon jet fighters, with staff cuts also expected in its Australian operations.
The vast majority of the UK job losses will affect its workforce in Samlesbury, Lancashire, although some roles will also be impacted at its Typhoon final assembly production team.
It was the biggest riser in the top flight, up almost four per cent, or 16.7p to 455p, despite saying the slowdown in jet production would hit its 2015 financial results and will see Typhoon production sales drop from around £1.3bn in 2015 to around £1.1bn in 2016.
The shares rise came as BAE remained upbeat on deal activity, saying it still expects contract wins in the coming months.
Heavyweight miners were also down with Anglo American 42.9p lower to 449.9p, Glencore was down 7.9p to 95.9p, and BHP Billiton fell 46.4p to 877.3p.
Luxury fashion group Burberry was down 22p to 1313p, despite defying economic woes in China to post a better-than-expected three per cent rise in half-year underlying profits to £153 million.
The group also said like-for-like sales had improved in its third quarter after a dire end to the first half, when they fell four per cent, although it warned conditions remained "challenging" as growth in the world's second biggest economy slows.
Halfords was eight per cent lower in the second tier - off 35p to 395p after a slump in bike sales left it nursing a 5.9 per cent fall in half-year profits as the retailer cautioned earnings in the next financial year were also unlikely to grow.
The biggest risers in the FTSE 100 Index were BAE Systems up 16.7p at 455p, BT Group up 6.2p at 481.7p, National Grid up 9.2p at 916p and Direct Line Insurance 2.1p at 403p.
The biggest fallers in the FTSE 100 Index were Rolls-Royce down 130.5p at 536.5p, Anglo American down 42.9p at 449.9p, Glencore down 7.9p at 95.9p and Pearson down 45p at 774p.
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