The FTSE 100 fell almost 1.5% to below 5,900 in midday trade on Thursday as strong growth figures from China prompted monetary tightening concerns.
London's leading index dropped 1.46% to 5,889.62 but has since recovered marginally to sit 1.36% lower.
China today posted economic growth of 10.3% for the 12 months, surpassing expectations, despite a final strong quarter based on robust industrial production and retail sales.
This growth rate, which has seen China overtake Japan as the world's second biggest economy behind the US, is driving concerns of monetary tightening by China in order to dampen inflation.
Nonetheless, inflation in China had actually cooled to 4.6% in December, after a 28-month high the previous month.
Global markets have been affected with Germany's Dax down 0.75% to 7,029.59, while France's Cac 40 fell 0.43% to 3,959.58.
In the UK, stock specific factors are also a drag on the index of leading shares. Associated British Foods is down 3.23% to £10.79 as rising commodity prices are denting margins, while the weather-affected sugar crop will slice annual profits.
Engineer Invensys is the biggest faller, down 7.11% to 332p, as orders fell at the rail division while reduced demand for controls has also trimmed profits.
The aviation sector's constant evaluation of errors in order to improve safety should be applied to defined benefit (DB) schemes, as too many are repeating the same mistakes again and again, research has shown.
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