Inverted bond yield curves in both the US and UK, often a warning signal for recession, plus weak German and Chinese economic data escalated fears of a global economic slowdown.
The FTSE 100 closed down 1.4% at 7,147.88 while the S&P 500 was down 2.1% by 4.30pm UK time.
LARGE AND MID CAP RISERS AND FALLERS
Although they didn't emerge until 9.30am, results from Prudential were apparently worth the wait for investors, the shares initially marked higher before being dragged 5% lower to £14.21 amid wider market weakness.
The first half numbers showed a 14% increase in profit and there was also an update that the demerger of M&G Prudential would go through in the fourth quarter.
Sports apparel and equipment retailer Sports Direct reversed 9.3% after revealing that Grant Thornton had resigned as its auditor following 'a review of its client portfolio'.
Construction company Balfour Beatty rallied 10.4% to 217.4p as a cost-cutting drive helped it boost its first-half profit and hike its dividend by 31%.
Transport company FirstGroup dipped 0.4% to 113.6p on the back of news that it won a UK tender to take over the West Coast train line, replacing Virgin Trains.
AstraZeneca dipped 1.4% to £72.43 after reporting positive clinical trial results for an ovarian cancer treatment developed with Merck, and, separately, the granting of a US breakthrough therapy designation for a leukaemia drug.
Payments company Network International, which listed in April, fell 1.3% to 587.4p as its first-half profit halving thanks to one-off expenses related to staff remuneration and listing charges.
The company, however, also boosted underlying earnings as customer wins helped boost sales 12%.
Property investor CLS gained 1.4% to 227.5p as it saw first-half profits rise by more than a quarter, following an increase in rental income and portfolio valuation gains.
Cybersecurity company Avast jumped 7.6% to 352.4p after upgrading its profit guidance for the year.
SMALL CAP RISERS AND FALLERS
Water-saving technology developer Xeros Technology fell 16% to 7.65p, on announcing that it planned to raise between £5m and £10m via a share issue and slash its headcount as part of an exit from direct sales business by the end of 2019.