The FTSE opened lower in morning trade on Tuesday as investor confidence was hit by stock sell-offs in the US and Asia.
In London the FTSE opened down 1.32%, or 68.51 points, to 5,133.05, losing gains made on Friday.
Financials were the early fallers. Barclays shares lost 7.7p, or 2.53%, to 296.25p, while RBS was also down in early trading, dropping 2.3% to 42.51p.
European stocks were also lower. The German Dax opened down 38.76 points, or 0.65%, at 5,912.41, while the French Cac was down 20.43 points, or 0.58%, at 3487.01.
Disappointing personal income and spending data from the US are being blamed.
In New York on Monday, the Dow fell 141 points, or 1.39%, to close at 10,009.73.
This followed data showing personal incomes rose less than expected in July. A key report on jobs is due later this week.
Japan's Nikkei 225 was also badly hit. It closed on Tuesday down 325 points, or 3.5%, to 8,824 - its lowest close since April 2009.
A strong yen pummeled Japanese shares already dragged down after Wall Street fell amid pessimism about the US economy.
Dragging on sentiment was the yen's advance and disappointment over the central bank's decision to ease monetary policy by expanding a low-interest loan programme.
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