London’s top shares have fallen nearly 3%, while other European markets have seen even bigger falls, amid anxiety about the health of the global economy.
In morning trading, the FTSE 100 index fell 165.16 points to 5,507.14.
At the same time, share indexes in Frankfurt and Paris were down 3.2% and 3.9% respectively.
Analysts said US Federal Reserve boss Janet Yellen’s gloomy economic assessment on Wednesday had added to investors’ worries.
In testimony to Congress, Ms Yellen said financial conditions in the US had become “less supportive” of growth and warned of the “increased volatility” in global financial markets.
On the FTSE 100, the biggest losers were a mix of banks, mining firms and energy stocks.
Mining giant Rio Tinto fell 4.7% after it revealed that it had made an annual loss of £596m.
Fellow miners Glencore and Antofagasta shed 5.8% and 4.5% respectively.
However, other firms in the sector fared better. Randgold Resources rose 4%, while Fresnillo added 5.5%.
In Paris, Societe Generale bank was particularly hard hit, falling more than 14%.
The bank’s share price was hit after it said it was scrapping its target of obtaining a 10% return on equity by the end of this year.
On the commodities markets, Brent crude was down 1.6% to $30.36, while US light crude fell 2.8% to $26.67.
On the currency markets, the pound hit a 13-month low against the euro, falling 0.82% to €1.2757.