The FTSE 100 has closed at 6,080.49 points, down 2.59% from its previous close.
Shares fell sharply when the market opened today, following steep declines in China where a 7% fall in shares triggered the suspension of trading.
Those who remained within the square after the half hour police warning were told they faced arrest if they refused to leave the area immediately.
Activist Tanya Paton, 40, from Halstead in Essex, walked away from the protest some minutes earlier saying protesters were "delighted" to have briefly set up camp in Paternoster Square.
Musician Denis Fernando, 36, from Wembley, north west London, promised further action, adding: "We are the first green shoots of what's going to be a very long spring."
Most demonstrators were cleared from the square at around 10.30pm. A group remained sitting on the ground surrounded by police.
Protest group Occupy London spent the afternoon setting up tents and hanging banners and posters across Paternoster Square: the area outside the London Stock Exchange.
City of London Police have now cordoned off the area, and only a handful of protesters remain inside.
Others were given 30 minutes to remove themselves, or face arrest.
The majority of protesters have left Paternoster Square as police 'containment' has moved in.
About six protesters remain sitting in the middle of the square in an act of defiance.
Protesters outside the London Stock Exchange have been told by police they must leave Paternoster Square as they are "causing a serious disruption to the life of the community" and their continued presence is against the law.
If they remain on the square they will be in breach of section 14 of the Public Order Act, according to police.
Our reporter Martha Fairlie is at the scene and says several protesters are now sitting down, whilst others have started to evacuate.
The City of London police have told protesters occupying Paternoster Square that they must leave the area within half an hour.
Earlier this evening Occupy London protesters successfully set up camp in the area outside the London Stock Exchange.