The FTSE 100 was down 98.71 points at 4189.3 while the FTSE 250 fell to 5925.56, down 167.76 points, at 11.58am.
Mining stocks proved the biggest drag on the benchmark index this morning after falling metals prices prompted a round of profit taking. Lonmin was the weakest, losing 12.91 per cent or 110p at 742p, while Kazakhmys fell to 236.25p, down 9.05 per cent or 23.5p.
The Eurasian Natural Resources Corporation lost 8.45 per cent or 23.5p to 254.75p.
There was little activity on the upside this morning with only a handful of defensive stocks, including Imperial Tobacco, up 21p at 1639p, and GlaxoSmithKline, up 13p at 1133p, managing to register gains.
Pub companies fell after Morgan Stanley downgraded JD Wetherspoon, down 6.33 per cent or 19p at 281p, and Punch Taverns, down 8.76 per cent or 11p at 114.5p, to “underweight” from “equal weight”.
The broker also unsettled the wider leisure sector, moving bingo operator Rank, down 5.86 per cent or 3.5p, and hospitality group Park Plaza Hotels, down 4.95 per cent or 2.5p at 48, to “underweight”.
“We now incorporate a deep multi year recession into our forecasts and no longer assume a v-shaped recovery in 2010, resulting in 8 per cent earnings per share downgrades on average for 2009 and 14 per cent for 2010 (we are well below consensus for most stocks),” the broker said.
Elsewhere, fund manager New Star Asset Management slumped to 6p, down 57.14 per cent or 8p, after the UK listing authority denied its request for a temporary suspension in trading while it attempts to conclude financing discussions with lenders.
In the banking sector, Standard Chartered traded down to 786p, down 6.82 per cent or 57.5p, after Morgan Stanley reduced its target price for the stock to 665p from 820p.
“We think the shares will stay under pressure while markets remain risk averse and emerging markets and capital issues remain,” the broker said, reiterating its “underweight” rating.