More than £140 billion was wiped off the value of UK companies in early trading as an all-out oil price war between Saudi Arabia and Russia sent stock markets across the world plunging.
Following its opening at 8am, the FTSE 100 leading index of London-listed businesses collapsed by more than 8%, wiping off more than 500 points.
Oil also saw its fastest single-day fall since the first Gulf War.
By 8.30am the FTSE 100 had fallen 8.6%, down 558 points at 5,903.34, to a four-year low, hitting levels not seen since the Brexit referendum result in 2016.
By 10am the fall had stabilised slightly, down 6% at 6,071 points - but still wiping off £96 billion from stocks.
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Neil Wilson, chief market analyst at Markets.com, said: "This will be remembered as Black Monday. If you thought it couldn't get any worse than the last fortnight, think again. The blood really is running in the streets, it's utter carnage out there.
"The oil price shock has totally unnerved investors while Italy's decision to quarantine 16 million citizens in the north of the country has left markets feeling like the coronavirus outbreak is out of control - where next? The UK is preparing for the worst."
Traders, who are already fearful of an economic slowdown due to the coronavirus outbreak, piled out after the Saudis said they would ramp up production and cut prices.
Overnight, a barrel of Brent Crude oil fell 30%, settling down 25.8% at 33.60 dollars (£25.57) per barrel as European markets opened.
With oil priced in dollars, the pound benefited, rising by 0.7% to 1.316 dollars.
In London, shares in Royal Dutch Shell led the drop, with the price down 22% within 30 minutes of markets opening. BP also fell 19.6%, with shares down 79p at 316p.
By 10am BP was the biggest faller on the FTSE 100, down 71.3p at 323.8p.
It was smaller companies who were hit even harder - Premier Oil and Tullow Oil both lost 55% and 37% of their value respectively.
Around 15 of the top 100 companies lost more than 10% of their value within the opening 30 minutes of trading.
The move comes as the Saudis said they would raise production, even if it means taking a hit, as it battles with Russia over how much oil should be produced during the coronavirus outbreak.
There had been demand for oil supplies to be cut, to help shore up the price. But Russia indicated it would be willing to "turn on the taps", leading to the Kingdom to fight back with a promise of cheaper oil.
Tesco has agreed a deal to sell its supermarket arms in Thailand and Malaysia, in a move worth around £8.2 billion.
It said it will receive around £8 billion in cash proceeds and plans to hand £5 billion of this to shareholders in a one-off dividend.
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Tesco has agreed to sell the south-east Asian business to CP Group, Thailand's biggest conglomerate presided over by Dhanin Chearavanont, the country's second richest man.
In December, the supermarket confirmed that it was considering a sale of its Asian operations as part of a strategic review and had been approached by a potential buyer.
Last month, Tesco also exited China after selling its stake in the Gain Land joint venture for £275 million.
The company said it received multiple offers for the Asian division and believes the disposal "will realise a significantly higher value than could be generated from Tesco's continued ownership and investment".
Tesco said the deal, which is expected to complete in the second quarter of 2020, will "further simplify" the business and leave it only with operations in Europe.
It said it will now focus on operations in the UK and Ireland, where it has 3,769 stores, as well as its Eastern European operations, where it has 895 sites.
Chief executive Dave Lewis said: "Following inbound interest and a detailed strategic review of all options, we are announcing today the proposed sale of Tesco Thailand and Tesco Malaysia.
"This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders."
Insurer Phoenix Group has reported a jump in profits as its pension business benefited from UK companies rushing to offload risk ahead of Brexit.
The FTSE 100 firm's operating profits for the year to December increased by 14.4% to £810 million.
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It has seen client numbers increase as UK companies sought to offload pension obligations from their balance sheets to improve their financial flexibility.
Phoenix said it generated £707 million in cash in 2019, surpassing its predicted range of between £600 million and £700 million for the year.
The company has 10 million policy holders and around £248 billion in assets under administration with operations in UK, Ireland and Germany.
The business is set to expand further with the £3.2 billion acquisition of Swiss Re's life assurance business ReAssure, in a deal which was agreed in December. It said it expects to close the deal in mid-2020.
Phoenix also announced that Jim McConville, the company's group finance director and group director for Scotland, will step down from the company on May 15 after eight years with the business.
His departure will be part of a major leadership shake-up at the company, with current chief Clive Bannister retiring later this month.
Mr Bannister has spearheaded the company's rapid growth in recent years and will be replaced in the top role by Andy Briggs, the former head of Friends Life and Aviva UK.
Mr Bannister said: "Phoenix has had a strong year - we beat our cash generation target, made significant progress in the transition of Standard Life Assurance and announced the £3.2 billion acquisition of ReAssure.
"I am extremely proud of the evolution of Phoenix during my time as CEO and I would like to thank all of the colleagues I have worked with throughout to deliver benefits to both our customers and shareholders."
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