The FTSE 100 index was down 2.5 per cent, at 5,958.86 points at its close, a touch lower than European indexes.
The UK market is relatively exposed to mining and commodities stocks, which have fallen sharply as emerging market growth slows.
Glencore slumped 29 per cent – its biggest one-day drop – to an all-time low after a Investec raised doubts over the mining and commodities company’s valuation and high debt levels.
“If major commodity prices remain at current levels, our analysis implies that, in the absence of substantial restructuring, nearly all the equity value of both Glencore and Anglo American could evaporate,” Investec analysts wrote.
Anglo American shares fell 10.1 per cent.
The FTSE 350 mining index was down nine per cent at its lowest since December 2008. Rio Tinto, BHP Billiton and Antofagasta all fell more than 4.5 per cent.
“One cannot deny the fact that investors are – if the [Glencore] share price is telling you anything – extremely concerned about the near-term outlook,” Charles Stanley market analyst, Jeremy Batstone-Carr, said.
The outlook for China’s economy was also a drag, with forecasts pointing to a likely shrinking of its factory sector for the second month in a row. Profits earned by Chinese industrial companies declined at the sharpest rate in four years in August, according to official data.
“It may be too soon to believe a bottom is in [for commodity prices]," London Capital Group analyst, Brenda Kelly, said.
On the deal-making front, Vodafone was hit by news that tie-up talks between the network operator and Liberty Global had collapsed. Vodafone shares were down 4.8 per cent, their lowest level in 10 months.
Among standout gainers, brewer SABMiller touched six-month highs, rising 1.3 per cent after a report in the Sunday Times that Anheuser-Busch might bid about $106bn (£70bn) for the company.
“News of the proposed takeover of SABMiller… has put M&A firmly in the spotlight,” HSBC strategists wrote in a note to clients.