UK and European stocks tumbled on Tuesday (9 February) as fears over a global slowdown were exacerbated by dismal performances across the mining and banking sectors, which saw a number of European lenders in the red.
London's FTSE closed down 0.78% to 5,644.97, while the main European benchmarks were also firmly in negative territory, as France's CAC 40 and Germany's Dax fell 1.69% and 1.11% respectively and the Pan European Stoxx 600 lost 1.61%.
"The markets will be hoping that Wednesday's comparatively packed day of data will be able to see a swing in sentiment, a wave of European industrial production figures, and the start of a two-day testimony from Janet Yellen providing hopefully some much needed distraction from the week's early doom and gloom," said Spreadex's analyst Connor Campbell.
Oil prices appeared to have shrugged off a downbeat report from the International Energy Agency, which forecast the oil crisis could worsen in the future, but could not sustain the gains and edged lower, as West Texas Intermediate fell 0.17% to $29.64 a barrel, while Brent lost 1.76% to $32.31 a barrel.
On Britain's main benchmark, miners and commodity-related stocks were worst performers of the day, with Antofagasta plunging after analysts at Goldman Sachs downgraded the stock to 'sell' from 'neutral' and slashed the price target to 250p from 440p, citing lower copper price forecasts.
The investment bank retained its 'sell' rating on both Rio Tinto and Anglo American, leading to both stocks suffering heavy losses, while there was better news for Next and WPP which led the risers on London's blue-chip index.
"The most worrying aspect of today's [9 February] move has been the weakness in the mining sector," said IG's senior market analyst Chris Beauchamp. "Yesterday a number of these firms were, if not rallying, at least holding their ground.
"Today sees them resume their declines, as the positive narrative and short-covering of last week both unwind. If this continues, we can expect the lows of January to be just another milestone in this ongoing selloff."
Commodity shares were under pressure on the FTSE 250 as well, with Vedanta Resources and Tullow Oil among the worst performers on the index, while security solutions provider Sophos Group plunged after its third quarter results were hit by the strong dollar, which offset the gains it deriving by a major acquisition it completed in the period.
FTSE 100 - Top 5 risers
Intercontinental Hotel +2.47%
ARM Holdings +2.23%
FTSE 100 - Top 5 fallers
Anglo American -11.35%
BHP Billiton -5.64%
BG Group -5.50%
FTSE 250 - Top 5 risers
QinetiQ Group +5.42%
Allied Minds +3.92%
Aveva Group +3.23%
Cineworld Group +2.89%
FTSE 250 - Top 5 fallers
Sophos Group -14.55%
Vedanta Resources -10.86%
Tullow Oil -8.03%
Enterprise Inns -7.66%
OneSavings Bank -7.54%