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%.
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Russia will pay the price for launching air strikes to prop up the Assad regime, the US defence secretary has warned.
'Vote Leave' - a cross-party campaign calling for Britain to leave the European Union in the forthcoming referendum - has been launched.
Sir Bruce Forsyth had to be rushed to hospital after a fall at his home.