Disappointing economic figures from the US coupled with a warning over a double-dip recession in the UK have plunged global markets further into the red in afternoon trading.
As at 15.30, the FTSE 100 fell nearly 2%, or 98 points, to 5136, wiping away yesterday's gains by miners and financials.
New MPC member Martin Weale stoked economic fears with a warning over the likelihood of a double-dip recession.
Additionally, figures from the US showing sales of existing homes plunged 27% in July compared to June also fanned concerns about the strength of the US and global recovery. The figures marked a ten-year low.
The Dow is down 1.33% to 10,039 with Boeing, Caterpillar and General Electric the biggest fallers.
Vedanta - which is buying a 51% stake in Cairn India - is the largest loser after its proposal to mine bauxite in India was rejected. It is down more than 7%. Wolseley is also weighing heavily on the index after announcing plans to offload its Brandon tool-hire business.
Fellow miners Rio Tinto and Kazakhmys are also down as the M&A speculation fuelling the sector's recent rally dies down. Legal & General also makes it into the loser's group, down over 5%.
