Fresh fears over the global downturn have seen stock markets around the world plunge.
Last night on Wall Street the Dow Jones dropped 5.07 per cent to fall under the 8,000 mark for the first time in five years as the Federal Reserve stated US economic growth was only likely to return in 2010.
The falls continued overnight in Asia with the Nikkei down 6.89 per cent and the Hang Seng dropping 4.04 per cent.
Traders in Europe continued from where they left off yesterday with the FTSE 100 down 1.84 per cent at 08:58 GMT after yesterday's near five per cent drop.
The Cac 40 in Paris was down 3.02 per cent this morning and Frankfurt's Dax was down 3.12 per cent.
Tom Hougaard, at City Index said he expected the FTSE to drop 120 points today and the Dax to fall 130 points.
"There is no doubt that the market is oversold, but we are in the latter stages of the panic cycle, and fear is finally beginning to set in," he said.
"I suspect that we will see a low in the market in the first week of December."
In London the biggest falls went to the insurer Aviva falling 9.24 per cent to 319.25p while Prudential dropped 8.84 per cent.
Vedanta Resources was down 9.08 per cent, Schroders fell 8.84 per cent and British Airways lost 7.16 per cent.
News of upcoming pre-Christmas sales helped retailers.
Next was up 3.33 per cent and Marks & Spencer rose 2.38 per cent.
Royal Bank of Scotland was up 2.36 per cent to 43.30p and Rexam rose 1.24 per cent.