The blue-chip FTSE 100 dropped back below the 6,000 mark, closing down 70.75 points or 1.2 per cent at 5,961.49.
The Dax in Germany and Cac 40 in France were also lower, down 1.9 per cent and 2.6 per cent respectively, with the escalating Volkswagen emissions scandal returning to the fore after the group admitted its cars were also affected across Europe.
Alastair McCaig, senior market analyst at IG, said: “The scrutiny that the automotive sector is under is having a particularly detrimental effect on the Dax, as 10 per cent of the equities in the index come from this sector and even more disturbing is the fact that its index weighting is even higher.”
Oil stocks suffered as BP dropped 2 per cent or 6.6p to 322.9p, while Shell was 36p lower at 1,539.5p.
Sainsbury’s was lower ahead of its trading update next week, with shares hit by a downbeat broker note from HSBC which cut profit forecasts for the chain. Shares fell 5p at 223.7p.
Engineer Smiths Group was another faller, giving back some of the gains seen on Wednesday after full-year results showed higher profits but falling sales. Shares fell 64p to 975p.
Lloyds Banking Group was one of the biggest blue chip risers after reports that a leading fund manager expects the lender to become a big dividend payer within two years. Shares in the bank rose 0.89p at 73.8p.
High street retailer Next was also among the top gainers, ahead 40p to 7,535p after a price upgrade from broker Nomura.
In the FTSE 250, Thomas Cook climbed almost 3 per cent, or 3.1p to 119p, after saying it made good progress over the summer despite “external shocks” including the deadly terror attack in Tunisia.
NEW YORK: More evidence that global economic growth is slowing pushed the US stock market down for a third straight day yesterday. The Standard & Poor’s 500 index fell 6.52 points to 1,932.24. The Dow Jones industrial average lost 78.57 points to 16,201.32. The Nasdaq composite fell 18.27 points, or 0.4 per cent, to 4,734.48.