Top-flight stocks came under fire as the volatile oil price and lacklustre growth from the services sector hammered the London market.
The FTSE 100 Index slumped 73.5 points to 6091.23 as experts warned of a slowdown in UK economic growth for the first quarter following a sluggish performance from the services sector.
The closely watched Markit/CIPS services purchasing managers' index (PMI) showed a reading of 53.7 last month, improving on the near three-year low of 52.7 seen in February. A reading above 50 signals growth.
But it said the pace of growth had been dragged down by concerns over the gloomy outlook for the global economy and fears that Britain could vote to leave the European Union.
Commodity stocks also pulled the market lower as blue-chip miners and energy companies bore the brunt of falling oil and metal prices.
Oil giants Royal Dutch Shell and BP were down 36.5p to 1655p and 7.3p to 337.5p respectively, while miner Anglo American saw a rally in the previous session come to an abrupt end, dropping 21.8p to 525.7p.
Brent crude fell by as much as 1% at the start of the session as it continued to feel the force of last week's comments by Saudi prince Mohammed bin Salman, who poured cold water on the prospect of cutting oil production unless Iran and other major producers follow suit.
But it regained some losses to rise six cents to 37.75 US dollars a barrel.
In Europe, Germany's Dax was down 2.6% and the Cac 40 in France fell 2.2%, as the International Monetary Fund warned that more action was needed to shore up the global economy and prevent long-term slow growth.
The pound was down nearly 0.8% against the dollar at 1.41, as the currency markets digested the latest update from the services sector.
Sterling was also down 0.7% against the euro at 1.24.
In stocks, top-flight house builders rebounded from losses in the previous session to sit among the biggest risers.
Berkeley Group was up 82p to 3283p, Taylor Wimpey lifted 1.4p to 192.3p and Persimmon rose 16p to 2123p.
However, supermarket giant Tesco saw its share price drop nearly 2%, or 3.3p, to 187.7p despite industry data pointing to signs of a recovery in the grocer's sales.
Britain's biggest supermarket saw sales slide by just 0.2% in the 12 weeks to March 27, according to Kantar Worldpanel, which predicts the retailer to return to growth within the next few months.
Gold miner Randgold Resources saw its stock price buoyed by a lift in the gold price, with shares climbing more than 2%, or 130p, to 6335p.
The miner has been a safe haven for investors in recent months following bouts of market volatility triggered by fluctuating commodity prices.
Menswear specialist Moss Bros saw shares rise after profits leapt by more than a fifth as revamped stores and the demand for lounge suits lifted sales.
The retailer, which has 124 stores, said annual pre-tax profits rose 21% to £5.8 million, up from £4.8 million, as like-for-like sales rose 8.2% to £119 million in the 52 weeks to January 30 2016.
Shares were up 4p to 100p.
The biggest risers in the FTSE 100 Index were Berkeley Group up 82p to 3283p, Randgold Resources up 130p to 6335p, London Stock Exchange Group up 28p to 2818p, Worldpay up 2.5p to 280.5p.
The biggest fallers in the FTSE 100 Index were Glencore down 8p to 141.9p, BHP Billiton down 32.2p to 734.5p, Standard Chartered down 19.4p to 432.7p, Anglo American down 21.8p to 525.7p.