The FTSE 100 suffered its worst session of the year so far after a global sell-off was sparked by concerns over a potential US recession.
Japan’s Nikkei 225 index suffered its worst day since 1987 on Monday after investors were spooked by disappointing American jobs data last week.
London’s main financial markets followed suit to open firmly lower and stayed in the red throughout the day as multinational firms were particularly weak.
London’s top index finished 166.48 points, or 2.04%, lower to end the day at 8,008.23. It marked the lowest close price since April.
Across the Channel, the picture was broadly similar, with the German Dax striking its lowest for around five months.
The Cac 40 in France ended 1.42% lower and the Dax index was down 1.95% at the close.
Stateside, Wall Street’s top indexes opened heavily lower thanks to market concerns over Bureau of Labour Statistics non-farm payroll data published late on Friday, with economists raising predictions that the US could witness a recession.
Chris Beauchamp, chief market analyst at IG, said: “2024 has been a quiet year for markets in terms of actual volatility, so today’s slump in the US feels much worse than it actually is when put into context.
“Already there are a number of commentators calling for emergency US rate cuts, but at the moment this is still a growth scare.”
Meanwhile, sterling dropped as it followed three consecutive weeks of decline with another weak session, amid stronger-than-expected activity in the services sector.
The pound was down 0.27% at 1.276 US dollars and was down 0.72% at 1.164 euros.
In company news, Hargreaves Lansdown shares were lower in the face of the global market downturn as it extended its deadline to strike a potential takeover deal.
The Bristol-based investment platform firm received a takeover proposal from a consortium led by CVC in June, which would value the firm at around £5.4 billion, and said on Monday that talks remain “ongoing” over the possible deal.
Shares in the company finished 4.4% lower at 1,051.5p on Monday.
Elsewhere, David Beckham-backed video gaming venture Guild Esports saw shares surge after confirmed it is nearing a deal to be taken over by US-based investment firm DCB Sports.
Guild said it has signed a letter of intent which would see DCB Sports buy all its assets and liabilities.
Shares in the company lifted by 78% to 0.21p, but this represented a fraction of its value upon floating on the stock market in 2020.
Engineering and consulting firm Wood Group dived in value after Dubai-based firm Sidara walked away from a possible takeover deal.
Shares slid by 35% to 128p after the potential suitor blamed “rising geopolitical risks and financial market uncertainty” for dropping its interest.
The price of oil was firmly lower for large parts of the session but clawed back ground after the US markets opened to be broadly flat.
A barrel of Brent crude oil was down by 0.05% to 75.77 US dollars as markets were closing in London.
The one riser on the FTSE 100 was Haleon, up 1.4p at 369.2p.
The biggest fallers on the FTSE 100 were Melrose Industries, down 30.7p to 451.9p, Severn Trent, down 154p to 2,499p, Scottish Mortgage Investment Trust, down 45.2p to 768p, United Utilities, down 56p to 1,003p, and CocaCola HBC, down 140p to 2,694p.