London plummets to three-year low
Federal Reserve chairman Janet Yellen made matters worse after saying there was a “chance” of a recession. Speaking to the Senate Banking Committee, Ms Yellen reiterated that the financial turmoil abroad could impact growth in the US economy.
The FTSE 100 index was 135 points lower at the close at 5,537 points, just ahead of its intraday low of 5,499.51 points.
Banks were among the fallers as concerns have grown over their ability to make solid returns in a lower growth environment. Barclays was down 6.4% and RBS 4%.
However, Prudential and Aberdeen Asset Management were the worst performers, both down 7.5%.
Worries over economic growth in China also returned, pulling metals and oil stocks lower.
Miner Rio Tinto took a hit after reporting a 27% drop in full year revenue, hurt by falling commodities prices, and cancelling its dividend payout policy. BP was down 6% on lower oil prices.