Alton Towers owner Merlin was one of the heaviest fallers in the top-flight after warning that profits from its theme park unit could be halved after last month's rollercoaster accident.

Shares initially plunged by as much as nine per cent - though they later fought part of the way back from this low - after the group said it expected underlying earnings from the unit at £40-£50 million this year compared to £87 million in 2014.

The fall came as the wider FTSE 100 Index slid into the red again, showing no sign of a bounce after a gloomy run last week as it fell 74.7 points to 6505.1.

Sentiment was dented by a renewed sell-off in China overnight where the Shanghai share index dived by more than eight per cent despite recent efforts by the Beijing government to support the market.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said it was one of the "blackest days ever" for the Chinese stock market - its second worst since the turn of the century - though it was still 11 per cent higher than when it started the year.

Germany's Dax and France's Cac 40 were both down sharply by around 2.5 per cent. New York's Dow Jones Industrial Average was also in the red.

Focus in Europe shifted back to Greece as negotiators from the debt-laden nation's creditors were arriving in Athens for talks on its third bailout package but the government said high-level staff discussions will not take place until later this week.

In currencies, sterling was under pressure against the euro after CBI manufacturing figures showed factory orders at their weakest level in two years. The pound was a cent lower at 1.40 against the single currency.

But it was a cent up against the US dollar at just under 1.56 - amid jitters over the outcome of this week's meeting by US Federal Reserve policy makers and whether it will pave the way for a rates hike or not

Merlin was down after it warned that the crash at Alton Towers has had "an adverse impact on trading at the start of the critical summer period" as well as for full-year financial performance.

The accident seriously injured five people and led to the four-day closure of Alton Towers.

Merlin's expectation of earnings as low as £40 million for its theme parks division this year would be around £50 million lower than City expectations for 2015.

The group added that impact on profits could spread into next year. Shares fell four per cent, or 18.1p at 405p.

Consumer goods giant Reckitt Benckiser was one of the biggest risers in the top-flight after well-received half-year results showing like-for-like revenue growth of five per cent.

It prompted the Dettol-to-Nurofen maker's chief executive Rakesh Kapoor to say it now expected to exceed full-year targets. Shares rose almost two per cent, or 85p to 5993p.

The biggest risers on the FTSE 100 Index were Bunzl up 30p at 1791p, Reckitt Benckiser up 85p at 5993p, Randgold Resources up 50p at 3794p and Fresnillo up 7p at 625.5p.

The biggest fallers on the FTSE 100 Index were Pearson down 58p at 1161p, Merlin Entertainments down 18.1p at 405p, Sage Group down 20.5p at 520.5p and 3i Group down 18.5p at 540.5p.