Britain's blue chip index erased its gains for the year, falling 1.2 per cent to 6,500.54 points this afternoon.
The FTSE 100 had closed at 6,556.10 at the end of 2014, although it rose as high as 7,100 in April.
The index started the day flat - shrugging off falls in the share prices of companies such as Merlin and Pearson - as well as turmoil which ripped through Chinese stock markets overnight.
Alton Towers owner Merlin's shares shed 3.7 per cent to 407.5p per share this afternoon, after it issued a profit warning, following the rollercoaster collision last month which left four people seriously injured.
Pearson shares were trading down 4.8 per cent at 1,160p after the publisher confirmed it was in talks to sell its 50 per cent stake in the Economist.
But it later succumbed to the Chinese stocks sell-off, which had weighed on European markets earlier in the day.
Chinese equities suffered their biggest one-day fall since the financial crisis as investors grew concerned that Beijing will scale back efforts to stabilise its stock market.