The FTSE 100 fell to a six-month low as political jitters and global trade spats sent global equities into the red.
London's blue chip index ended the day down 1.27% or 91.85 points at 7,145.74.
It was a sea of red across European equities, with the French CAC 40 and German DAX down 2.1% and 2.2% respectively.
Across the pond, the Dow Jones Industrial Average slipped 1.4% while the Nasdaq Composite slumped more than 2%.
David Madden, a market analyst at CMC Markets UK, said: "Continued concerns about the political situation in Italy, and the relatively high yields on US government bonds, and the strained global trading relations have all contributed to the decline in European stocks."
Traders were jittery as Italy signalled it was sticking to plans to raise the budget deficit to 2.4%, putting it on a collision course with Brussels.
Investors also worried about the heated trade spat between the US and China.
But the rising pound was also weighing on the FTSE 100, as its multinational constituents tend to benefit when foreign currencies are stronger.
The pound was trading at its highest levels against the euro since June, up 0.1% at 1.144.
Versus the US dollar, sterling shot up 0.5% to trade at 1.320.
It came as UK growth data released by the Office for National Statistics (ONS) showed gross domestic product (GDP) rising at a healthy clip of 0.7% in the three months to August.
That was above consensus estimates for 0.6%.
A drop in the strength of the US dollar also played a part in bolstering the pound.
Brent crude prices slipped 1.7% amid reports that Saudi Arabia may supply oil to India in a move that could provide a short-term solution to restricted exports from Iran, which is facing US sanctions.
In UK stocks, easyJet shares were down 14p at 1,197.5p.
Its chief executive has warned that more airlines could collapse like Primera Air amid rising fuel costs - with oil prices closer to 85 US dollars a barrel, compared with 69 US dollars in April.
Marston's shares slumped 2.2p to 99p as the Pitcher & Piano owner said a surge in pub-goers during the World Cup and the UK heatwave would help deliver record annual profits.
The firm said it is expecting to report underlying pre-tax profits of around £104 million for the year to September 29, up 3.9% on the £100.1 million posted the previous year.
Shares in PageGroup were down 12p at 533p despite having notched up a 19.7% rise in third-quarter gross profit to £207.7 million on a constant currency basis.
But the recruiter also reported poor UK figures, having delivered a meagre 0.8% increase in profits for the period, with Brexit and political uncertainty having affected confidence.
Telford Homes tumbled 27.5p to 366.5p after warning that Brexit was affecting housing demand.
The London-focused housebuilder said customers are more cautious when it comes to purchases over £600,000 as they look for price reductions to "offset a perception of higher risk as Brexit gets closer".
The biggest risers on the FTSE 100 were Kingfisher up 9.2p at 261.1p, BT Group up 8.3p at 237p, United Utilities up 23.8p at 721.4p, and Lloyds Banking Group up 1.81p at 59.11p.
The biggest fallers on the FTSE 100 were Mondi down 170p at 1,775.5p, Burberry Group down 152p at 1,728p, Halma down 92p at 1,267p, and DS Smith down 29p at 418.2p.
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