FTSE 100 closed not far off 1.5% lower on Monday as global investors took profit amid fears of central banks tightening monetary policy.
The UK's premier index tumbled over 108 points to close at 7,334, while FTSE 250 lost almost 272 points at 19,690.
In the currency markets, the pound was off 0.38% against the Euro and down 0.56% against the US dollar.
On Wall Street, the sell-off, which started on Friday, has continued, with the Dow Jones off around 250 points.
"European markets are firmly in the red as the global sell-off in stocks has taken hold," said David Madden, at CMC Markets.
"Ever since the US posted strong average earnings last Friday, traders have been rattled by the prospect of tighter monetary policy around the world.
"Economic indicators in the US, Europe and Asia point for a need to tighten up monetary policies from various central banks. Equity traders were enjoying a bullish run recently, and the jolt from the major decline in the US last Friday has triggered a worldwide round of profit taking."
Kingfisher (LON:KGF) was the biggest FTSE 100 gainer, up 2.26% at 357.30p, while top laggard was Randgold Resources plc (LON:RRS), down 7.38% to 6,524p.
It comes despite the gold titan reporting a 14% advance in 2017 profit and doubling of its annual dividend.
The digger said full year profits were US$335mln, with net cash increasing by 39% to US$720mln. It has no debt and has proposed doubling the dividend to US$2 a share.
The FTSE 100 index remained weak near session lows going into the final half hour of trading even though US stocks rallied from big opening falls, steadying a little after Friday's plunge.
Around 4pm, the UK blue chip index was still down about 90 points at 7,352, just above the session low of 7,334.
But in New York, the Dow Jones had cut back an opening plunge to 50 points at 25,470, while the tech-laden Nasdaq index managed to tally 0.2% higher.
Connor Campbell, financial analyst at Spreadex said: "Given that at one point the index was nearing 25100, the fact that it is flat around the 25500 mark is something of a coup for the Dow Jones.
"A stellar ISM services PMI likely helped, with the figure coming in far higher than forecast at 59.9, against the 56.5 expected and the 55.9 seen in December."
The FTSE 100 resisted the further sharp sell-off on Wall Street, although remained firmly in negative territory shortly after the opening bell in the US.
The index of UK blue-chip shares was 87 points at 7,3556.59, but off its session lows.
The Dow Jones fell 193 points to 25,328.21after losing more than 600 points on Friday amid fears interest rates may have to rise further and faster than first anticipated.
Financials were the wrist affected, while the tech-heavy NASDAQ market was also hard hit with Amazon, Netflix, Apple and Amazon all marked down.
The FTSE 100 index hovered around a triple-digit loss at lunchtime on expectations that the savage sell-off seen on Wall Street last Friday will continue at the start of the new week after strong US jobs data stoked fears of more Federal Reserve rate hikes than currently expected thjs year.
Around midday, the UK blue chip index was down 98 points at 7,345, just off the session low of 7,344.25.
On Friday, the Dow Jones in New York dropped over 600 points, with the S&P and Nasdaq following suit, and market watchers expect the US blue chip index to open another 130 points lower on Monday.
James Hughes, chief market analyst at AxiTrader, commented: "The big issue here is value, and has the value of the constituents of these major indices been manufactured by the tax plan.
"For a long time we have spoken about just what has been driving the positive earnings figures, and how they have potentially been a little inflated. So after outgoing Fed Chair Janet Yellen said that asset valuations are elevated it adds to the downside pressure and adds to the calls from analysts and traders talking the markets lower."
He added: "Inflation is the battle ground, and if anything will be blamed going forward if the stock market downside continues it will be the potential strength in CPI towards the end of 2018."
Hughes concluded: "Expectations are that we will see 4 rate hikes from the Fed in 2018 starting with a 25bp hike at the March meeting."
On currency markets, sterling fell back against the dollar, down 0.3% at US$1.4085, but recovered earlier falls to be flat versus the euro at ?,?1.1307.
There were less than ten gainers among the leading equities in London, although DIY store owners got a boost from reports that Aussie retail conglomerate Wesfarmers is struggling to make an impact in the UK following its acquisition of Homebase.
Wesfarmers is reviewing the operation and while a sale of the DIY chain "certainly wouldn't be the preferred outcome" all options were under consideration, said managing director Rob Scott.
B&Q owner Kingfisher (LON:KGF) was the biggest FTSE 100 gainer, up 1.7% at 255.4p, while Wickes chain owner Travis Perkins PLC (LON:TPK) gained 0.2% at 1,428.5p.
But among the blue chip fallers, mobile phones giant Vodafone PLC (LON:VOD) was down 3% at 212.5p on reports the firm is in early talks to buy some of Liberty Global's assets in the continental European countries where they both operate.
The news comes two years after discussions between the pair collapsed.
With Brexit talks high on the agenda this week, today's weak UK services purchasing managers' report contrasted sharply with some better news for the eurozone.
The eurozone PMI for January was revised upward from 58.6 to 58.8 in January after the PMI for services came in 0.4 points higher at 58.
#PMI data show that #eurozone economic growth nears 12-year high in January https://t.co/6t4POlYZ96 pic.twitter.com/0ihJwXSf34
- Markit Economics (@MarkitEconomics) 5 February 2018Economists at ING said: "The optimism reflects the strong economic upturn that the Eurozone is experiencing, which continues to be broad-based and is set to continue in the months ahead.
"Backlogs of work are increasing, job creation is historically very strong and new orders continue to pour in. This makes for a rosy growth outlook in the months ahead with a side note of increasing price pressures."
They added: "Even though markets are currently rattled by higher inflation expectations, we expect Eurozone inflation to remain subdued throughout the year given the continued weak wage growth, the effects of the stronger euro on import prices and the lagged effect of survey indicators on selling prices on inflation."
A slight blot on the copybook, however, were eurozone retail sales number, which disappointed in December with a -1.1% month-on-month decline.
ING said: "Although the increased popularity of Black Friday may have shifted some sales from December to November, the overall holiday sales period seems rather weak."
On currency markets, sterling slipped back 0.1% against the euro to ?,?1.1321 in late morning trading, but remained flat versus the dollar at US$1.4115.
European equity markets continued to remain depressed following last Friday's slide on Wall Street, with the FTSE 100 index down 89 points at 7,354.
The Footsie stayed depressed, while the pound remained flat in mid market trading following further evidence of the strains on the UK economy's main driver of growth.
Around 10am, the FTSE 100 was down 79 points, or 1.1% at 7,364, reflecting sharp falls pre-weekend on Wall Street and in Asia today amid rate hike concerns after strong US jobs data on Friday.
The IHS Markit/CIPS Purchasing Managers' Index (PMI) for the country's dominant services sector slowed to a 16-month low of 53.0 from 54.2 in December.
The weighted-average of Markit's UK PMIs has fallen to its lowest since Sep. 2016, signalling that GDP growth will slow to 0.3% in Q1, from 0.5% in Q4. Markets need to reassess their view that there's a 50% chance of the next rate hike coming as soon as May. pic.twitter.com/JfjCwILUT4
- Samuel Tombs (@samueltombs) 5 February 2018The reading was at the bottom end of a range of forecasts and combined with last week's weaker-than-expected surveys for the manufacturing and construction sectors, suggested the world's sixth-biggest economy grew last month at its slowest pace since shortly after the Brexit vote in 2016.
With the Bank of England Monetary Policy Committee to meet later this week, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "January's Markit/CIPS report should prompt investors to reassess their view that the chance of the MPC raising interest rates again as soon as May is as high as 50."
Other UK data today, showed new car registrations fall 6.3% in January, in part due to customers being put off from buying diesel models which politicians have targeted over air quality concerns, according to an industry body.
Total new sales stood at 163,615 units with demand for diesel vehicles declining by an annual 25.6% while petrol cars rose 8.5%, according to data from the Society of Motor Manufacturers and Traders.
As expected, the FTSE 100 took a whacking at the open, following the 'freaky Friday' sell-off on Wall Street which spread overnight to Asia's main markets.
The index of blue-chip shares fell 81 points to 7,362.08 amid worries that American interest rates may have to rise more quickly than most market watchers had been anticipating. Wage data lit the blue touch paper.
"Selling pressure is being maintained with markets taking another step lower after the opening falls," said Neil Wilson, of EXT Capital.
"What kind of correction is this? So far, the Dow is off about 5% from its all-time highs and it all looks reasonably orderly (a much overdue correction for many) in as much as there are no big risk-off moves in foreign exchange [markets].
"The yen actually weakened against the dollar last week - if we are to see a major risk-off collapse in sentiment we should expect to see the yen gain ground, not lose it.
"Gold has also eased off recent highs as the dollar has picked along with rising yields.
"So for now it's an equity storm, created by the pressure from bonds, but still a fairly localised one. We'll have to see the Dow back at 24,000 for this to be a full-on correction."
The leading Footsie gainer, up 2.3%, was B&Q owner Kingfisher (LON:KGF) amid reports that Aussie retail conglomerate Wesfarmers is struggling to make an impact in the UK following its acquisition of Homebase.
Wesfarmers is reviewing the operation and while a sale of the DIY chain "certainly wouldn't be the preferred outcome" all options were under consideration, said managing director Rob Scott.
The market's biggest faller, for largely technical reasons, was Cineworld (LON:CINE) after it confirmed it was moving ahead with plans to acquire Regal Entertainment Group for ?2.7bn.
Deutsche Bank, dropping its price target to 360p from 825p to reflect the planned rights issue to fund the Regal deal, repeated its 'buy' recommendation.
Analyst James Wheatcroft said he "liked" the deal. "We conclude that a strong cash flow will rapidly reduce debt and fund material Regal estate investment," he added.
"We see management bandwidth, the film slate and shorter-term trading comps as the main risks.
"We are less concerned by second half of 2017 admissions trends, a shortening film release window and content competition."
Glenover Phosphate, a sUBSidiary of Galileo Resources PLC (LON:GLR), has signed heads of agreement for an off-take deal with a major industry player. Glenover will supply raw phosphate rock in the form of concentrate from its project in Limpopo Province, South Africa. Big Pic in December.
Secure payments and customer contact solutions group Eckoh PLC (LON:ECK) has secured six "sizeable" contract wins over the past two months or so. One of the deals is with one of the UK's largest mobile network providers while the rest are across the payments, insurance and healthcare sectors. Big Pic in November.
Kibo Mining PLC (LON:KIBO) shares gained on news that, following a month of close interaction and co-operation with the Tanzania Electric Supply Company and the Ministry of Energy, at both departmental as well as ministerial level, the company's CEO and COO arrived in Dar es Salaam on 02 February 2018 to conclude final formalities related to the signing of the MCPP Memorandum of Understanding.
Landore Resources Ltd (LON:LND) has boosted total nickel equivalent resources at its B4-7 deposit in Canada by 43%. Total metal contained now rings in at 46,661 tonnes, with the mineralisation still open along strike and at depth.
Active Energy Group PLC (LON:AEG) this morning told investors that its first commercial CoalSwitch plant is set to become fully operational, and it will be officially opened this week. The plant, in Utah, United States, will produce the group's biomass based fuel to client specifications and initial production is supported by offtake contract.
Obtala Limited (LON:OBT) has topped up its recent ?4.5mln fundraise by an additional ?0.91mln. The Africa-focused agriculture and forestry group carried out a sUBScription, institutional placing and a retail share offer at 12.5p each. Any shares issued have a warrant attached that converts at 20p during the next two years.
UK biopharma Faron Pharmaceuticals Oy (LON:FARN) has established a second manufacturing site for its lead drug candidate, Traumakine. A facility in Ilsensburg, Germany - run by contract manufacturing organisation, Lyocontract - will complement the primary site currently operated by Rentschler Biopharma.
Horizonte Minerals Plc (LON:HZM) has completed a trial excavation programme at its Araguaia nickel project in Brazil. The programme included mining 27,000 tonnes of ore, analysis of the ore and additional drilling. The results will be incorporated into the company's ongoing feasibility study.
Bezant Resources plc (LON:BZT) has announced it will raise ?600,000 via a sale of new equity, securing working capital and bringing in new investors including AIM-mining deal maker Colin Bird. Some 133mln new shares are being sold in an oversUBScribed placing arranged by Peterhouse CorporateFinance. The new shares are priced at 0.45p and they will be issued in two tranches, with the first anticipated later this week and the second is subject to shareholder approval.
Stobart Group Limited (LON:STOB), the infrastructure and support services group, said it was notified that, on 2 February 2018, Andrew Tinkler, an executive director of the company, acquired 250,000 ordinary shares at a price of 247.78p per share. Following the above purchase, the group added, Tinkler holds a beneficial interest in 27,226,811 ordinary shares, representing approximately 7.68% of the company's issued share capital.
Metal Tiger PLC (LON:MTR) announced that Charles Hall, the firm's non-executive chairman has purchased 1,000,000 shares at an average price of 2.077p per share. Following these on market purchase, the group said Hall is interested in 30,858,406 shares in Metal Tiger, representing 2.82% of the company.Metal Tiger also announced that its latest corporate presentation is available to view on the company's website.
KEFI Minerals (LON:KEFI) announced that it has recently assembled and submitted applications for over 1000km2 of strategically selected copper and gold tenements near the company's Tulu Kapi development project in Ethiopia (via its wholly-owned sUBSidiary KEFI Minerals Ethiopia) and also a similar-sized area near the company's Hawiah exploration project in Saudi Arabia (via its 40%-owned Joint Venture with ARTAR). KEFI also said it has been invited to present at the Investing in African Mining Indaba Conference base metals session, being held in Cape Town this week, as well as giving itscorporate presentation.
Harvest Minerals Limited (LON:HMI) announced that it has approved an incentivisation scheme for its executive directors and senior management. The AIM listed fertiliser development company said the performance shares - 2mln each for executive chairman, Brian McMaster and executive director Luiz Azevedo, plus 1mln each for chief operating officer, Mark Heyhoe and project manager, Luis Clerot - will be issued for nil consideration in four equal tranches subject to a number of conditions.
Harvest Minerals also announced that a video providing an overview of its Arapua Fertiliser Project, Brasil, and the work currently being conducted on site is now available to view on the company's website.
The FTSE 100 is expected to fall sharply at the open, following the rout on Wall Street Friday, which precipitated some fairly heavy losses on Asia's main markets overnight and early this morning.
The index of blue chip stocks is primed to fall 78 points to 7265.43, according to the spread betting firms.
Having galloped into nose-bleed territory since the turn of the year, America's stocks benchmarks have been afflicted by a bout of the jitters prompted by worries that interest rates may have to rise faster and further than predicted.
"The January payrolls report, and in particular it was the wages numbers prompted a further sharp rise in yields across the board, and drove US markets to their worst weekly performance in two years, as well as wiping out all of the gains of the previous two weeks," said Michael Hewson of CMC Markets.
He added: "For a while now investors have assumed that we would probably get another two, or maybe even three rate rises this year.
"Friday's data has prompted a readjustment of that calculus with the potential for a fourth, and this change is likely to drive the US 10-year yield back to 3% in short order."
Back here in the UK, the Bank of England Monetary Policy Committee is expected to keep base rates on hold when the decision is transmitted to the market on Thursday.
The Bank's inflation report will be keenly eyed as a guide to the MPC's direction of travel over the coming months.
The pick of the scheduled corporate results this week come from BP (LON:BP) and GlaxoSmithKline (LON:GSK).
Trading updates: Electrocomponents PLC (LON:ECM), Ryanair PLC (Q3) (LON:RYA)
Finals: Randgold Resources PLC (LON:RRS)
Economic data: UK services PMI, US non-manufacturing ISM