The FTSE 100 Index slumped by more than 2 per cent as a climate of fear returned to global markets due to events in China and Greece
In a session when Tesco’s fourth profits warning in the space of a year caused its shares to fall by as much as 16 per cent, the Footsie mirrored other European markets with a slide of 142.68 points to 6,529.47.
The sell-off reflected fears of a fresh crisis in Greece after the country’s government brought forward the date of a presidential vote.
Jasper Lawler, market analyst at CMC, said: “Should the Greek prime minister’s favoured choice not be chosen for president then that could create a precedent for snap elections and risks the [left wing] Syriza party coming to power and destabilising the eurozone.”
Meanwhile, China shocked world markets by tightening credit conditions, but despite the impact on financial firms and the ongoing issues with the oil price, it was a retailer that stole the negative limelight.
Almost £2 billion was wiped from the value of Tesco shares at one stage as chief executive Dave Lewis warned that investment in price and product availability and in shaking up its supply chain would take its toll.
The beleaguered stock staged a partial recovery towards the end of the session to finish 7 per cent or 12.4p cheaper at 174.9p. Rival Morrisons dropped 8.2p to 176.7p and Sainsbury’s fell 4.2p to 231.6p.
The sell-off in London was across the board, with Barclays down 8.65p to 238.5p and mobile phone giant Vodafone off 6.35p to 223.6p.
But the safe haven attraction of gold meant Randgold Resources surged 4 per cent or 149p to 4,335p. Outsourcing firm G4S was another of just six blue-chip risers after an upgrade from broker Credit Suisse. Shares rose 5.8p to 279.8p.