The FTSE 100 has been denied any respite from recent heavy losses, plunging another 80 points this morning.
The blue-chip index has now tumbled more than 500 points since last week and is on course to extend its losing streak to seven days.
It had its worst day for more than six weeks yesterday, losing almost 220 points amid fears of a fresh banking crisis.
Financial bookmakers had predicted a more modest fall of around 25 points today.
The FTSE fell as low as 4097.27, 83.37 points down on last night's close, before rallying to 4123.93, a fall of 56.71.
The market fallers are led by Barclays, down nearly 9% to 130p.
The bank lost more than 14% of its value yesterday after announcing more than 4,000 job cuts.
Shares in Homebase and Argos owner Home Retail have fallen almost 7% to 192.2p after the group reported a 10% fall in quarterly sales.
Private equity group 3i, which has been falling steadily in recent days, is another big faller, down 4.6% to 272p.
HSBC, a heavy faller yesterday, is down again – off 4.3% at 563.5p – amid fears that it may need to raise fresh capital.
Among the mid-caps, Barratt Developments dropped nearly 6% to 77p.
The company gave a grim assessment of the housing market in a trading update: "Whilst it was encouraging to see a pick-up in our sales during the autumn selling season, market conditions remain challenging, impacted by a combination of poor buyer confidence and restricted access to mortgage finance.
"Until these issues ease we remain of the view that there will be no sustained recovery in the housing market."
HMV prospered yesterday's after-hours trading update, in which the entertainment retailer announced it was moving into the live music market.
The retailer reported underlying sales up 3% in the five weeks to 3 January and has picked up 14 stores from stricken rival Zavvi.
HMV shares are up more than 6% at 135.75p.
Bookmaker William Hill saw shares rise more than 7% to 222.5p after reporting "resilient" trading in the 11 weeks to December 30.
The market has welcomed the revelation that Daily Mail & General Trust is to sell a controlling stake in the London Evening Standard to Russian oligarch Alexander Lebedev.
DMGT shares edged up 2% to 263.5p.
"It is not possible to conclude on financial attractions of this potential deal - no price is mentioned - but the removal of a perennial loss-maker from DMGT's portfolio would be welcome," said Charles Peacock, a media analyst at Teathers.
