The FTSE 100 dropped over two per cent in early trading, as traders maintained their levels of caution.
At 09:33 BST the index stood at 3,821.36 – a drop of 77.49 points or 1.99 per cent – after making up some greater early losses.
Banks and miners – after last week's gains – slipped back at the start of the week.
Xstrata fell 7.00 per cent and Kazakhmys dropped 6.47 per cent.
After last week's burst on passing the FSA's stress test, Barclays was down 6.67 per cent, while Lloyds Banking fell 6.83 per cent.
Insurer Aviva was down 6.22 per cent.
Gains were few but Next led the race, rising 1.35 per cent, while Cable & Wireless was down 0.96 per cent.
The downbeat start to the week was started in Asia, where the Nikkei fell 4.53 per cent – after last week seeing its biggest weekly increase since October.
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