Renewed fears over Europe sent world stock markets into the red ahead of an expected plea from Greece for more time to meet austerity measures.
Nervous investors headed for the exit ahead of crucial meetings this week between Greek prime minister Antonis Samaras and eurozone leaders.
The FTSE-100 Index slumped 1.4%, or 83.3 points to 5774.2, while the Cac 40 in France was down 1.5% and Germany's Dax dropped 1%.
America's Dow Jones Industrial Average followed suit with a 0.4% fall in early trade, with caution ahead of minutes from the Federal Reserve's last meeting – a key to providing clues on possible further economy boosting measures.
The pound held firm after hitting a three-month high against the dollar, at 1.58 dollars, while it also rose to €1.27.
Miners were at the forefront of the sell-off, with BHP Billiton adding to the pressure after reporting a 35% decline in annual profits due to the slowdown in global growth.
BHP Billiton shares were 33p lower at 1947p, while Kazakhmys led the FTSE declines with a 30.5p drop to 704.5p.
Energy firm SSE was one of only two risers after it announced a shock 9% rise for electricity and gas bills from October 15 to recoup higher wholesale energy prices.
While an unpopular move with customers, investors cheered the decision, sending SSE shares up 16p to 1354p.
In corporate results, support services firm Carillion held firm after a 1% rise in underlying half-year profits to £73.1 million. The company said it remains on-track to hit full-year expectations. Shares were 0.5p higher at 268.3p.
Elsewhere, Stagecoach shares were 4.2p lower at 293p after chief executive and co-founder Sir Brian Souter announced plans to relinquish day-to-day running of the firm he helped set up in 1980.
The switch from chief executive to chairman goes against corporate governance codes but the company said it was important to retain the 58-year-old's expertise.
Five-a-side football operator Goals Soccer Centres was also firmly in the red, down 20% or 29p to 115.5p, after shareholders failed to back its £73.1 million proposed takeover by Ontario Teachers' Pension Plan.
The only Footsie risers were SSE up 16p at 1354p and Tullow Oil ahead 4p at 1379p.
The biggest Footsie fallers were Kazakhmys down 30.5p at 704.5p, Evraz off 10.3p at 255.5p, Eurasian Natural Resources down 14.2p at 356p and Anglo American down 73p at 1910p.
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