Blue chip stocks took a hammering today as Friday's sharp falls on Wall Street spread to the London market in an echo of the Black Monday crash almost 20 years ago to the day.
The FTSE 100 Index dropped 101.8 points into the red by mid-session trading after a troubled market opening, which saw the Footsie fall nearly 2% in the first few minutes.
The benchmark index was mirroring heavy overnight falls in Asia, with global markets reacting to a significant sell-off in America late last week on the 20th anniversary of Black Monday.
In London, miners and housebuilders were among the hardest hit amid fears of further trouble in the credit markets and the US economy, sparked off by Friday's 367-point fall on the Dow Jones Industrial Average.
Nervous investors were waiting for the US opening later today, with the Footsie failing to rally with little in the way of corporate or economic news on this side of the Atlantic.
Power station group British Energy suffered the most, with shares diving by 13% after it said four of its nuclear power reactors would remain off-line for longer than expected in order to carry out repairs to boiler units.
The mining sector was also down across the board, with a downbeat assessment from brokers at Citigroup compounding the impact of the wider market sell-off.
Fewer than a dozen firms made gains today, with mobile phone group Vodafone and Financial Times publisher Pearson among the diminished list of share risers.
The FTSE 100 dropped by more than 1% on Friday, but the City was braced for further stock market pain today with much of the losses in the US not seen until after the London market closed.
US investors were disappointed by profits warnings from major companies such as Caterpillar, as well as heavy loan write-offs at the US's fourth largest bank, Wachovia.
Other European exchanges were also on the back foot today, with early losses seen on French, Belgian and Swiss markets.
The 1987 crash saw the FTSE 100 shed 11% in one day, followed by a 12% drop the next day in response to US falls.
Markets have been under pressure in recent months due to a tightening in wholesale money markets, sparked off by soaring default rates among high risk mortgage borrowers in America.
The London market had rallied earlier this month, with the FTSE 100 moved to within two points of a seven-year high just 10 days ago - trading above the 6,700 mark - as the index recovered from a year low of 5858.9 when panic gripped markets in August.Reuse content