Global shares slumped again after gloomy data from China ignited fresh fears over the strength of the world's second biggest economy.
The FTSE 100 Index closed 189.4 points, or three per cent, lower at 6058.5 after heavy falls in Asian markets overnight following a Chinese manufacturing report showing activity fell to a three-year low last month.
It wiped about £48 billion from the value of the FTSE 100's constituent companies.
Sentiment was further hit by dismal manufacturing figures from the US and UK - where the sector saw jobs falling for the first time in more than two years.
German's Dax and France's Cac 40 each fell by more than two per cent while in New York, the Dow Jones Industrial Average was trading around two per cent lower.
The declines come after a dire August for global equities, with the FTSE 100 and Standard & Poor's 500 Index on Wall Street both suffering their worst month since May 2012.
In currencies, sterling was under pressure after the UK's disappointing manufacturing figures for August which suggested growth in the sector slowing to near stagnation.
The pound fell a cent against the euro to a little over 1.36 though it was little changed against the US dollar at just above 1.53 after the US also saw disappointing factory data.
In London, miners were the biggest fallers as the Chinese manufacturing report showed a contraction in the sector, signalling slowing demand for commodties.
Glencore dropped 10 per cent or 14.8p to 133.5p while miner Anglo American was off nearly eight per cent, or 56.6p at 684.4p and BHP Billiton dropped 76p to 1056p.
Asia-focused bank Standard Chartered was also hard hit by China's latest woes, falling 40.8p to 724.2p. Luxury fashion brand Burberry, which earns much of its revenue from China, fell 70p to 1341p.
Housebuilder Berkeley Group looks set for promotion to the FTSE 100 Index after its share price rose by more than one third over the past year.
Surrey-based Berkeley is on course to take the place of Glasgow-based engineering firm Weir Group, which is in line to slip into the second-string FTSE 250 Index. Weir shares dipped 49p to 1355p while Berkeley was down 88p to 3284p. The changes are subject to final approval by a FTSE committee.
Online gambling firm 888 Holdings raised the stakes in its £1 billion takeover battle with GVC Holdings by sweetening its bid for FoxyBingo owner Bwin.party.
Bwin said it has received a revised proposal from Gibraltar-based rival 888 and will consider it alongside a new offer made last week by GVC in a two-way bidding war that has swung back and forth since May.
Shares in Bwin fell 0.8p to 115.6p, 888 Holdings rose 4.5p to 167.2p and GVC holdings slipped 0.5p to 447.5p.
Car dealer Vertu Motors was in focus after reporting a five per cent hike in like-for-like sales in the five months to the end of July, adding that full-year results will be in line with expectations. However shares fell slightly, down 0.2p at 65p.
The only riser in the FTSE 100 Index was Meggitt, up 11.3p to 488.7p.
The biggest fallers in the FTSE 100 Index were Glencore down 14.8p to 133.5p, Anglo American down 56.6p to 684.4p, BHP Billiton down 76p to 1056p and 3i Group down 32.6p to 459.2p.
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