London’s top-flight index plunged 458 points to 5,880 – down 7.2 per cent – as experts warned of more carnage to come.
The pound also crashed 8 per cent against the dollar, falling from $1.50 to $1.36.
Banks bore the brunt of the fall, with Royal Bank of Scotland down 28 per cent, Barclays 27 per cent lower and Lloyds taking a 24 per cent dive.
Dennis de Jong, managing director of UFX.com, said: “This is simply unprecedented. The pound has fallen off a cliff and the FTSE is now following suit. Britain’s EU referendum has been a cloud hanging over the global economy for the past few months and that cloud has got very dark this morning.
“The markets despise uncertainty, yet that is exactly what they’re faced with this morning. The shockwaves are likely to reverberate for some time and the warning lights are flashing brighter now than ever.”