The FTSE 100 tumbled 1.6 per cent by mid-session today amid a global sell-off, as a surge in the yen and the unwinding of carry trades rattled investors.
By 11:25 a.m., the FTSE 100 was down 98 points, or 1.6 per cent at 6,018.6, its lowest since December 1st, as miners, oil shares and banks led the slide.
The index plunged nearly 5 per cent last week.
European shares also slumped, while the Nikkei average fell 3.34 per cent today, its biggest one-day fall in nine months that took it to a new closing low for 2007.
The yen hit three-month highs against the dollar and the euro as investors rushed to close out risky trades and pay off the cheap yen loans that financed them. Investors are also concerned over the state of the US and Chinese economies.
"We see the root cause in the further lurch upward of the yen/dollar rate, with the implications for the carry trades - potentially with people getting squeezed out of margin calls and having to close the yen borrowings," said Roger Cursley, UK strategist at Investec.
"The question is whether or not it would bring out any casualties among the traders or on the banking side."
The Irish Stock Exchange was down around 1.74 per cent this afternoon.
Davy Stockbrokers said that although last week's sell-off left Irish equities almost 8 per cent down from their peak, the index is still down only 2 per cent year-to-date and is "more than 30 per cent higher than the low point of the market last June".