The FTSE 100 index extended its losses on Tuesday after having traded with some volatility over the course of the day.
The UK's blue chip index fell 0.88 per cent to 5,632.19 points as banks and miners continued to tumble.
“It’s becoming a ‘get yer hard hat on’ situation with bank stocks coming down left and right on financial markets. Sensitivities over the prospects for global growth have spread from oil, metals and China-sensitive assets to banks and other financial institutions,” said Jasper Lawler, markets analyst at CMC Markets.
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"The start of the week has been a real nose-bleeder and as of yet there is no catalyst for a relief rally," he added.
Miners continued to slide, Anglo American leading the way, dropping 11.25 per cent to 333.8p per share. Antofagasta and Rio Tinto also fell 9.37 per cent to 410.9p per share and 4.86 per cent to 1,751p per share respectively.
BHP Billiton dropped 5.85 per cent to 666.1p per share, while Glencore closed at 94.44p, a 8.13 per cent drop.
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And banks were also under pressure. Barclays dropped 4.67 per cent to 156.25p per share, while Royal Bank of Scotland slid 2.21 per cent to 225.6p per share. HSBC was 1.36 per cent lower at 432.5p per share.
Lloyds closed 2.07 per cent down at 58.13p per share, while Standard Chartered’s share price fell 5.55 per cent to 403.3p per share.
And the worst may not be over. "There is a high probability of a further correction in equity prices, led by banking and energy stocks. There could be a wave of defaults in the energy sector and that will damage the balance sheet of the banking sector," said Lorne Baring, managing director of B Capital Wealth Management.
Some slightly better news was found elsewhere. Next led the risers on the FTSE after rating agency Moody’s tipped it over rival M&S to outperform and what has become a very competitive landscape. Its share price closed 3.65 per cent higher at 6,665p per share.