The FTSE 100 closed 1.8% lower on Wednesday, though slightly above earlier lows, as shares in retailers, banks and housebuilder Persimmon fell.
The benchmark index dropped below 5,800, to 5,756.9, giving back 105.02 points.
The FTSE 250 also fell by almost 2% to 9,534.8.
Persimmon was the day’s biggest blue chip decliner, losing 8.1%, followed by London Stock Exchange, down 7.1%, and Next, down 5.7%.
Shares in Marks & Spencer fell more than 5%.
Woolworth’s was another loser, with chief executive Trevor Bish-Jones falling on his sword after the ailing retail chain reported a 2.2% fall in like-for-like retail sales in the 19 weeks to 14 June, and a drop in group sales of almost 2%. The shares ended the day 5.2% lower at 9.27p.
As London was closing, Wall Street was also in negative territory, with traders there digesting the news that Morgan Stanley’s second-quarter earnings fell by 57%. The result was described as in line with expectations, but it underscored the financial sector's continuing problems.
At 5pm London time the Dow was down about 0.7% to 12,076.44 and the Nasdaq was off by almost 0.9% to 2,435.9.IFAonline
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