Stock markets have fallen sharply on growing worries about the global economic outlook, with the FTSE 100 enduring its worst daily loss since January 2016.
The index fell 237 points, or 3.2%, by the close of Wednesday trading, meaning more than £60bn was erased from its collective market value.
Investors initially responded to growing jitters over the state of the US economy following data showing the worst performance for its manufacturing sector in a decade – widely blamed on the US-China trade war.
Losses accelerated later in the session amid fears of a further expansion in protectionism, as the Trump administration was granted permission by the World Trade Organisation to impose tariffs on EU goods following a 15-year battle over state aid for Airbus.
Jitters over Boris Johnson’s blueprint to avert a no-deal Brexit also contributed to the risk-off sentiment, according to market participants.
Investment, retail and mining stocks suffered the most pain in London with only two stocks in the black for the session.
It marked the worst day for the globally-focused index since 20 January 2016 – before the vote to leave the EU – when investors were spooked by global economic woes amid a crash in oil prices.
Elsewhere on Wednesday, Germany’s Dax and France’s Cac 40 were also down sharply – by almost 3%.
US stocks, which hit four-week lows on Tuesday, saw losses accelerate with the Dow Jones Industrial Average more than 500 points down at one stage.
The round of selling was first triggered after the closely watched Institute for Supply Management (ISM) index of US factory activity dropped to the lowest level since 2009.
It dashed economists’ hopes that a previous contraction for the sector in August may have been a blip.
Donald Trump fired off a tweet blaming the US Federal Reserve for not cutting interest rates as much as he would have liked.
A slowdown in US growth would remove one of the few bright spots for the world economy at a time when the eurozone outlook looks weak, with Germany and the UK both teetering on the edge of recession and a possible no-deal Brexit looming.
Manufacturing readings in Europe and the UK were also bleak on Tuesday, while on Wednesday the latest monthly survey of Britain’s construction sector showed that it too was stuck in a downturn.
There was further gloom when Germany’s leading economic institutes slashed growth forecasts for Europe’s biggest economy, blaming weaker global demand for manufactured goods and increased business uncertainty due to trade disputes.
Edward Moya, senior market analyst at Oanda, said higher US oil inventories in a slowing market was among issues adding to the weight on stocks.
He wrote: “Risk aversion continues to help drive gold prices higher. Gold extended its gains above $ 1,500 an ounce on mounting concerns the US economy is weakening.”