London's FTSE 100 fell sharply as concerns over eurozone debt knocked global stock markets.
Markets have been unsettled by the result of the Spanish local elections and Greek and Italian debts.
Deep divisions among senior EU policymakers over the Greek debt crisis and fears of a sharp slowdown in growth across Europe, China and the US sent world stock markets into a downward spin on Monday.
The FTSE 100 tumbled 1.9% to 5835.9, a fall of 112.6 points, while the Dow Jones index had slumped 135 points, or more than 1%, by mid-afternoon in New York. A day of anxious trading also saw the euro fall one-and-a-half cents against the dollar as investors piled out of the currency.
Sentiment over the eurozone has been hit by recent figures from China showing growth slowing and a uninspiring recovery in the US. Fears of slowing demand has hit commodity prices with oil, copper, silver and gold prices sliding and dragged down mining stocks.
Concerns had also been rising after Standard & Poor's, one of the world's three biggest credit rating agencies, this weekend revised its outlook on Italian sovereign debt to "negative" from "stable".
Poor growth makes it harder for an economy to shrink its debt burden as tax receipts will disappoint.
There were also gloomy figures for the wider region as the index tracking the output of manufacturing and services in the eurozone, compiled by researcher Markit, indicated that May saw the slowest rate of growth in seven months.