The FTSE 100 index has fallen below 5,000 points for the first time since October 1998.
It has tumbling more than 2 per cent, under pressure from weaker drugs, banks and telecom stocks.
The benchmark index fell 114.7 points or 2.26 per cent to 4,955.6 by 11 a.m., extending Friday's 134-point slump as economic outlook worries persisted. Market volume was a modest 540 million shares.
Pharmaceutical shares accounted for some 27 points of the downside, with GlaxoSmithKline down 3.7 per cent to 1,684 pence and AstraZeneca 3.2 per cent lower.
Scottish Power was an early feature, dropping 11.7 per cent on concerns about US prices. Technology and telecom shares, seen heading out of the FTSE 100 at Wednesday's quarterly review, showed sizeable falls, including COLT, down 7 per cent.
In Dublin, the ISEQ index also came under pressure this morning as negative sentiment dented Irish shares.
Financial holdings were weaker, with AIB down 27 cents or 2.25 per cent at euro 11.71, Bank of Ireland off 1.2 per cent at euro 9.76 and IL&P down 5 per cent at euro 13.25.