The FTSE 100 crashed more than 8% on Monday morning over a potential oil price war amid ongoing coronavirus fears.
Shares plunged more than 8% in early trading, as investors reacted to an oil price war launched by Saudi Arabia overnight which wiped 30% off the price of a barrel of oil.
Brent crude slumped by 30% at the start of trading, after Saudi Arabia effectively launched a price war against rivals such as Russia and the US.
It comes as investors remain alarmed about the economic fallout of the coronavirus outbreak.
The crash follows big falls in Asia, with Japan's Nikkei 225 index down 5% while Australia's ASX 200 slumped 7.3%, its biggest daily drop since 2008.
Markets have been rattled by the threat of a price war between oil exporting group Opec and its main ally Russia, which has sent oil prices tumbling.
An Opec meeting with Russia last week failed to see countries agree to a production cut. In response, Saudi Arabia has warned it will increase its production and slash its own prices to claw back market share.
It's seen global oil prices suffer their worst losses since the start of the 1991 Gulf War - while the UK economy has crashed to levels even lower than during the 9/11 crisis.
Neil Wilson, chief market analyst at Markets.com, said: "This will be remembered as Black Monday. If you thought it couldn't get any worse than the last fortnight, think again. The blood really is running in the streets, it's utter carnage out there.
"The oil price shock has totally unnerved investors, while Italy's decision to quarantine 16 million citizens in the north of the country has left markets feeling like the coronavirus outbreak is out of control - where next? The UK is preparing for the worst."
Kyle Rodda of trading firm IG explains: "Markets have gone into panic mode, pure and simple. The fall-out between the Russian and Saudis has lead the Saudis to pledge over the weekend that it will flood the global oil market with supply, in order to exert their will over oil prices.
"The plunge in the oil price has raised major credit risks in financial markets, which are already reeling from the expected slowdown in global growth because of the coronavirus."
Earlier on Monday, coronavirus concerns led Saudi Arabia to cut off air and sea travel to and from nine countries: Bahrain, Egypt, Iraq, Italy, Kuwait, Lebanon, South Korea, Syria and the United Arab Emirates.
An interior ministry official said: "Out of concern to protect the health of citizens and residents and ensure their safety, the kingdom's government decided to temporarily suspend the travel."
The virus usually leaves people with only mild to moderate symptoms, but because it is new, experts cannot say for sure how far it will ultimately spread and how much damage it will do, both to health and to the global economy.
Worldwide, there are more than 110,000 confirmed cases, with more than 3,800 deaths attributed to it.
In the Middle East, there have been over 7,000 confirmed cases, with the vast majority in hard-hit Iran, which has seen 194 reported deaths.
