More than £29 billion was knocked off the value of the FTSE 100 on Wednesday as fears over Turkey's lira crisis and slowing growth in China spooked investors.
London's blue chip index plunged nearly 1.5%, ending the day down 113.77 points at 7497.87 points.
It marks the lowest point for the index since May this year.
Across Europe, the French CAC 40 and German DAX also tumbled, falling around 1.8% and 1.6% respectively.
"It's a broad-based sell-off across Europe as dealers are worried about the currency crisis in Turkey, and the cooling of Chinese growth," David Madden, a market analyst at CMC Markets UK, said.
"Natural resource stocks like BHP Billiton, Rio Tinto, Randgold Resources and Glencore are all lower on the session as metals are under severe pressure.
"Copper, platinum and palladium are weaker as traders are concerned the Chinese economy is cooling, and yesterday's disappointing fixed asset investment and industrial production reports from Beijing confirmed their fears."
Miners including Fresnillo fell 75.8p to 897p, while Anglo American dropped 102p at 1,542.2p, and Antofagasta tumbled 50.2p at 836.2p.
Sterling was trading at its lowest level in nearly 14 months against the US dollar at 1.269.
The UK currency was flat against the euro at 1.120.
UK data released on Wednesday morning showed that inflation rose for the first time since November, largely due to higher transport costs.
The Office for National Statistics said annual UK consumer prices index inflation rose to 2.5% in July, from 2.4% in June.
Brent crude prices tumbled 2.3% to around 70.51 US dollars per barrel, as US data revealed a larger-than-expected rise in crude stockpiles stateside.
In UK stocks, Royal Bank of Scotland lost ground, falling 2.6p to 239.6p, after the bank came last for overall quality of service in new league tables published by the Competition & Markets Authority (CMA).
The tables were based on a survey of personal and business banking customers.
GSK rose 30.4p to 1,590.4p on news that its majority-owned HIV specialist company ViiV Healthcare secured positive results in a phase 3 study for a two-drug regimen treatment.
If approved, the regimen would give people living with HIV one month between each dose of antiretroviral therapy, changing treatment from 365 dosing days per year to just 12, according to the pharma giant.
Admiral jumped 64p to 2,062p as the Cardiff-based insurer booked a 9% rise in half-year pre-tax profit, having logged strong growth in customer numbers despite the Beast from the East hitting its household arm.
Its UK household division swung to a £1.9 million loss versus a £1.6 million profit the year before due to extreme weather.
Balfour Beatty rose 2.4p to 292.7p as first-half profits quadrupled to £50 million thanks to cost-cutting and divestment gains worth £22 million.
The biggest risers on the FTSE 100 were Admiral Group up 64p at 2,062p, GlaxoSmithKline up 30.4p at 1,590.4p, WPP up 21.5p at 1,245p, and Direct Line Insurance up 5.2p at 334.2p.
The biggest fallers on the FTSE 100 were Fresnillo down 75.8p at 897p, Anglo American down 102p at 1,542.2p, Antofagasta down 50.2p at 836.2p, and Glencore down 17.9p at 298.5p
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