Investors have sold blue chips across the board to push the FTSE 100 down to seven-week lows as they fret about soaring oil prices, the conflict in Iraq and the prospect of a weak Wall Street start.
Volatile high-beta stocks, which tend to underperform a falling market, were among the worst hit. Software maker Sage fell 4.3 per cent and news and information group Reuters lost 3.2 per cent.
British Airways, Europe's second-biggest airline, also suffered with a 2.5 per cent drop after it reported a jump in profits but said fuel costs would rise by £150 million sterling this year.
The FTSE 100 was down 66.1 points at 4,375.7 by 12:32 p.m. on Monday. The move left the index hovering just above an intraday low of 4,363 - its worst level since March 29th. Traders said investors were shaken after oil hit new all-time highs and after a suicide car bomb killed the head of Iraq's Governing Council.
In New York, U.S. equity index futures pointed to a 1 per cent drop on the Dow Jones industrial index and the tech-focused Nasdaq when they open at 2:30 p.m.
Banks and insurers formed two of the worst-performing sectors, accounting for around a third of the market's drop. The move also mirrored a poor performance for financials in Tokyo. Insurer Prudential and global bank HSBC, which both have operations in Asia, fell more than 2 per cent each.