Renewed fears over spluttering global economic growth dragged back world markets with commodity and financial stocks suffering in the increasingly bleak climate.
Morgan Stanley cut its forecast for global growth, citing "recent policy errors" in the US and Europe, plus prospects of further fiscal tightening in 2012.
MSCI's world equity index fell 0.8 per cent while emerging stocks lost 1.34 per cent. In one positive move Standard and Poor's reaffirmed its positive outlook for France's Triple A rating.
But that was overshadowed by Deutsche Bank cutting its forecast for China's GDP growth, seen as pivotal in global recovery.
In UK economic news retail sales rose a lower than forecast 0.2 per cent in July.
European stocks fell 1.2 per cent, giving up the previous session's gains and the picture was mirrored in London in early trading.
Miners led the FTSE down as the slowdown in global growth put pressure on commodities. A deal between Anglo American, BHP Billiton and Xstrata to expand operations at a Colombian mine failed to impress investors.
Kazakhmys, Vedanta and Rio Tinto were all down more than three per cent - making them three of the top five losers on the blue chip index.
Software company Autonomy dropped by more than three per cent as the tech sector also slumped.
Drinks giant SABMiller was dented by 2.5 per cent after Foster's rejected a fresh bid.
Among financial stocks Barclays was the biggest faller, down 3.7 per cent per cent, as Germany and France's fledgling plans for a Europe-wide transactions tax continued to cast a shadow over the sector.
Lloyds was down 2.2 per cent while HSBC also lost more than two per cent and RBS dipped by 2.8 per cent.
There were few significant risers on the FTSE 100, with oil services company Petrofac, up 1.4 per cent, the fastest climber.
Insurance buyout vehicle Resolution was up 0.7 per cent after reporting a profit rise yesterday.
Consumer giant Unilever was also lifted by a mission statement targeting fast growth in emerging markets.
Asian stocks fell back on closing with Taiwan's tech-heavy index down almost two per cent, the biggest loser in the region's major markets. It tracked the fall in US tech shares, partly triggered by a warning from Dell over the tough market.
Across the Atlantic later investors will be eyeing US inflation data.