Update: The FTSE 100 has fallen further into the red, weighed down by growing fears of a trade war after US president Donald Trump announced plans to impose tariffs on imported steel and aluminium.
The UK blue-chip index closed 106 points, or 1.5% lower at 7,080, as US markets opened to further losses following yesterday's sell-off.
The Dow Jones dropped 1.4% after yesterday's 1.7% fall, while the broader S&P 500 followed yesterday's 1.3% drop by opening 0.7% lower.
Trump yesterday announced plans to impose a 25% tariff on steel imported into the US, and 10% on aluminium.
Asian markets fell into the red overnight, with Japan's Nikkei falling 2.5% and Hong Kong's Hang Seng down 1.5%.
European markets were meanwhile down sharply. Germany's DAX 30 fell 2.3% while France's CAC 40 lost 2.4%.
As our exclusive Accumulator data table shows, European markets, and the German DAX in particular, has suffered a poor week, even before today's falls.
Our table, which covers the five days to yesterday, shows a mixed performance for global markets, with European markets and the FTSE 100 down.
Fiona Cincotta, market analyst at City Index, said fears of retaliatory protectionism were weighing on markets.
'Whilst it remains unclear whether these tariffs will be placed on all imports or just those from some countries, the overriding fear is that these protectionist measures will spark a retaliation particularly from China and Europe, but also potentially from Brazil and Canada who are currently the biggest exporters of steel to the US.'
Michael Hewson said the news was particularly damaging for the German market, with Trump's intervention delivering another blow to car makers.
'The DAX appears to be leading the declines in European markets this week, with car makers already under pressure as a result of this week's German court decision regarding bans on diesel cars,' he said.