After hovering just over the 5000 point mark for the last couple of hours, the FTSE 100 tumbled right through it when the US non-farm payroll number for September was released at 1.30pm.
The monthly measure of American unemployment showed that 263,000 people lost their jobs last month. The news sent the FTSE down by 80 points, or 1.6%, to 4967. The Dow Jones industrial average is also expected to drop by around 100 points when trading begins at 2.30pm BST.
Analysts said the data was a blow to hopes that the US economy might be ready to stage a recovery.
Economists at Goldman Sachs had already raised their forecast from 200,000 to 250,000 on the back of yesterday's worse-than-expected weekly jobless figures. But the news that the situation was even worse than thought means the sell-off that began yesterday afternoon looks set to continue.
