The London market continued its torrid start to the year as it slumped amid sliding oil prices and after blue chip giant BP posted its largest annual loss for at least two decades.
The oil major slumped into the red by 5.2 billion US dollars (£3.6 billion) in 2015 and revealed another 3,000 job cuts, surpassing even the mammoth losses seen in the wake of the Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010.
The FTSE 100 Index dived 138.1 points to 5922 as Brent crude fell almost a US dollar-and-a-half to below 33 US dollars (£23) a barrel, darkening prospects for global trade.
World stock markets have become linked to the falling price of oil in recent weeks.
Germany's Dax was 2% down, while the Cac 40 in France was 3% lower. In New York the Dow Jones Industrial Average was more then 200 points down in early trading.
The London market had jumped 152 points last Friday, driven by rises in oil prices.
But Spreadex financial analyst Connor Campbell said: "It looks like the market ghosts that haunted January are still spooking investors this month, the gains seen last Friday now fully wiped out with Tuesday's commodity-driven plunge."
The pound was flat against the US dollar at 1.44, as data showed the UK's construction sector slowed in January to its weakest level for nine months.
The Markit/CIPS UK Construction Purchasing Managers' Index weakened to 55.0 from 57.8, well below economists' forecasts of 57.5.
Sterling was slightly down against the euro at 1.32.
BP was the biggest top flight faller, down almost 9%, or 31.9p, to 335.1p.
Royal Dutch Shell, which posts its annual results later this week, was 64.5p lower at 1435.5p.
Supermarket chain Sainsbury's was one of the few risers in the top flight, up almost 2%, or 5.9p, to 250.5p, after it offered up to £1.3 billion to take over Argos owner Home Retail Group.
FTSE 250 firm Home Retail said it "believes in the prospects for the standalone company", but added the possible offer provides an "attractive opportunity" for its shareholders to receive full valuation for their shares.
Home Retail lifted 0.1p to 153p.
Elsewhere, Telecoms group TalkTalk said a cyber attack on the firm in October cost the company as much as £60 million but fewer customers than feared opted to end their subscriptions.
The attack meant around 157,000 customers had limited data stolen from them, but overall in the third quarter the group said sales lifted by 1.8%.
Shares lifted 2%, or 4.1p, to 222p.
The biggest risers in the FTSE 100 Index were Hikma Pharmaceuticals up 66p at 2095p, Sainsbury's up 5.9p at 250.5p, Associated British Foods up 50p at 3200p and Berkeley Group up 21p at 3547p.
The biggest fallers in the FTSE 100 Index were BP down 31.9p at 335.1p, Prudential down 109p at 1217.5p, Anglo American down 21.9p at 252.2p, BHP Billiton down 45.7p at 632.4p.
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