FTSE 100 took its fall for the year so far to 11% as fears over the US economy and a terrible night in Hong Kong sent shares tumbling.
London’s blue chip index dropped 101 points to 5,570 even with a modest rally ahead of the US opening.
Spread bet firms expect the Dow Jones Industrial Average to mirror the falls seen in markets across Europe and Asia.
Early calls are for the Dow to open 250 points down, with reported panic buying of US bonds yesterday sending treasury yields to the lowest for four years.
A warning about the economy from the US Federal Reserve’s Janet Yellen sparked the rout, but Hong Kong dropping 4% and renewed fears over European banks fuelled the unease.
Yellen warned on financial market turbulence and suggested further rate hikes could be delayed, fuelling already raised anxiety about the health of the global economy.
Connor Campbell at spread bet firm Spreadex said that the main pain is being felt on the continent, with Credit Suisse hitting a 25 year low and Societe Generale slumping by 12%..
Deutsche Bank, which started the panic on Monday, lost a huge chunk of yesterday’s market-lifting rebound with a 7% plunge this morning, he said.
Precious metal miners were the main beneficiaries as gold rose above US$1,200 again.
Randgold Resources (LON:RRS) rose 365p, or 6.4%, to 6,065p and Fresnillo ((LON:FRES) twinkled 45p to 875p.
Financial stocks were under the cosh led by Barclays (LON:BARC), which shed 6% to 150p, while Prudential (LON:PRU) tumbled 7% to 1,098p.
Tobacco group Imperial Brands (LON:IMB) lost 17p to 3501.5p after it said revenue rose but volumes fell.
Rio Tinto (LON:RIO) backtracked 70p to 1,700p as it slumped into the red, cut future dividends and started another round of cost savings.
Gold miners were going well among the smaller caps, with Centamin (LON:CEY) up 5% to 79.4p and Acacia (LON:ACA) up 7% to 248.3p, but contractors with large emerging markets' interest were very weak led by Interserve (LON:IRV) down 13% to 368p, and AMEC (LON:AMFW), which shed 8% to 336p.
Ariana Resources (LON:AAU) said its local partner Proccea was making “rapid progress” with the construction of the pair’s Kiziltepe Mine in Turkey and it remained on course for first gold pour in the second half of the year. Shares lifted 0.07p, or 8.1%, to 0.93p.
Metal Tiger shares hardened 0.06p, or 6%, to 0.93p after the Botswana government formally agreed the transfer of 14 licences into a joint venture company it has with Australian firm MOD Resources (ASX:MOD).
Domino's Pizza franchise operator DP Poland (LON:DPP) reported LFL system sales in 2015 were up 16% on the year before, while the LFL order count was up 14%.Shares rose 6% to 25.1p.