The FTSE 100 Index fell 117.9 points, or 2.1%, to 5533.9 amid worries that a raft of Spanish regions were poised to ask for government bailout funds, increasing the likelihood that the country itself will turn to the EU for help.
The fall wiped nearly £30 billion from the value of London's leading shares index, with all 100 companies losing value and banks falling up to 4%.
More top news
Sheffield United are close to agreeing a deal to re-sign striker Ched Evans from Chesterfield, ITV News understands.
Cold and unsettled tomorrow with a chilly wind.
Police have released CCTV as they appeal for help in finding a 27-year-old trainee nurse who has been missing since last Thurday.