The FTSE 100 fell 2.07 per cent this morning at 9:15 BST to 5,391.50.
The index fell as concerns for the UK economy grew and commodities failed to provide the usual backbone.
The one firm to show major positive movement was property business Liberty International rising 4.29 per cent after the real estate investment trust (REIT) become the target of takeover speculation.
Admiral Group rose 0.95 per cent, pharma firm Shire was up 0.85 per cent and HBSC Holdings gained 0.42 per cent.
South African insurer Old Mutual led the falls dropping 4.60 per cent, followed by Enterprise Inns down 4.55 per cent.
London Stock Exchange Group was down 4.45 per cent, John Wood Group slid 4.25 per cent and Ferrexpo dropped 4.20 per cent.
London falls were spurred by those in New York with the Dow Jones and Nasdaq falling 2.08 per cent and 2.03 per cent respectively on renewed credit crunch fears.
The Dow Jones saw no shares rising in price, with financials Bank of America, JPMorgan Chase and AIG leading the falls.