World's stock markets hit by global shocks
"It's an unholy triumvirate of bad news," said Chris Purdy, trader at Spreadex. The FTSE closed down 92 points, or 1.6 per cent, at 5,845.29, a fresh year low.
Purdy said the index had plunged through the support barriers he was expecting and it was anyone's guess how much further the sell-off might go.
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Hide AdBanks were weaker as risk appetite remained off the menu for investors after Moody's cut Spain's sovereign credit rating and warned of further cuts.
Brent crude traded above $114 a barrel, near two-and-a-half year highs, as military activity intensified in Libya.
Miners fell with base metal prices, as high oil prices threaten to derail the global economic recovery. Weak Chinese import data also weighed on the sector, casting doubt on demand from the world's biggest metals consumer.
A number of blue chips suffered in the rout, including Standard Life and Cairn Energy.