The FTSE 100 suffered a steep fall as markets opened today, following other big sell-offs in equity markets around the world.
The benchmark stock indices in Germany, France, Italy and Spain all lost more than one per cent, dragging the Stoxx 600 index, which tracks the biggest companies across Europe, falling by 1.52 per cent at the time of writing.
London's blue-chip index lost more than one per cent in morning trading to hit its lowest point since 8 December.
Read more: FTSE 100 follows global stock market sell-off as bond yields jump
The share price of 97 firms on the FTSE 100 had declined at the time of writing, with particularly steep falls for Old Mutual, Rolls Royce and Vodafone.
Asian markets earlier tumbled, with Japan's Nikkei 225 down by 2.55 per cent. Hong Kong's Hang Seng composite index lost 1.21 per cent, while shares in Shenzhen lost 0.84 per cent – although the Shanghai market remained buoyant, with shares up.
The sell-off followed a painful week for US equity investors, culminating in the biggest one-day sell-off on the benchmark S&P 500 index in two years.
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The S&P 500 lost more than two per cent on Friday – in spite of continued strong earnings from major companies – for the first time during the presidency of Donald Trump, as investors start to fear a faster pace of monetary tightening from central banks.
US wage data on Friday showed average hourly earnings grew by 2.9 per cent in the year to January, the fastest pace since 2009. That prompted investor concerns that higher inflationary pressures in the US could force the Federal Reserve to quicken its pace of interest rate hikes, slowing the supply of easy money that has helped to stimulate the world's largest economy.
Futures trading currently indicates the sell-off in US equity markets will continue today.
Read more: US stocks slide to biggest loss under Trump presidency on inflation fears