The FTSE 100's steady recovery throughout September was completely undone within a dismal trading day after it plunged heavily following Brexit fears and weak construction figures.
London's top flight closed 237.78 points lower at 7,122.54 at the end of trading on Wednesday.
The London index suffered its heaviest slump since 2016 as a plethora of negative factors, which also included news that the US could place 7.5 billion dollars of tariffs on EU goods, weighed heavily on sentiment.
David Madden, market analyst at CMC Markets 海角视频, said: "Equity markets have suffered severe losses today as traders remain worried about the state of the global economy.
"In London, the energy sector plus the mining sector are nursing large losses on the back of the dismal manufacturing reports from major economies around the world this week.
"British banks in addition to insurance groups have been knocked by worries in relation to Brexit."
Deepening concerns over the state of the economy weighed down on all the major European markets, which were also impacted by the WTO decision that the US can retaliate with tariffs on EU goods following a lengthy dispute related to Airbus.
The German Dax decreased by 2.76% while the French Cac moved 3.12% lower.
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The Dow Jones moved into the red as fears of a recession, following poor manufacturing readings on Tuesday, gripped traders' minds.
Sterling improved against the dollar and euro slightly, but currency traders were left largely unimpressed by Boris Johnson's plans to secure a Brexit deal.
The pound was 0.2% up versus the US dollar at 1.231, and up 0.04% against the euro at 1.124.
Investors in Paddy Power owner Flutter Entertainment were the only FTSE 100 shareholders to make major gains on Wednesday, after its shares surged on its agreement to merge with Canadian rival The Stars Group.
Flutter will own 54.6% of the merged firm, which will have its headquarters in Dublin and be listed on the London Stock Exchange as well as on Euronext Dublin.
Shares in Flutter Entertainment leapt 530p to 8,164p.
The only other firm in London's top index to close in the black was Tesco, which announced its chief executive, Dave Lewis, will exit the retailer next year.
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Mr Lewis, who joined the business in the role in September 2014, will be replaced by Boots lifer Ken Murphy after claiming the grocer's turnaround is "complete".
Shares in the 海角视频's largest supermarket rose 0.5p to 240p at the close of play.
Elsewhere, Metro Bank shares leapt higher after it launched a fresh bond sale worth £300 million, hours after its founder and chairman Vernon Hill confirmed he will quit the board by the end of 2019.
Shares in the challenger bank rose by 48p to 228p.
Standard Life Aberdeen saw its shares slip after its vice chairman and former chief Martin Gilbert announced he was leaving the business after almost four decades.
Shares in the group declined 10.6p to 272.6p on Wednesday.
The price of oil declined on the back of fears of the global economic slowdown. The price of a barrel of Brent crude oil slumped by 2.9% to 57.48 US dollars.
The only risers on the FTSE 100 were Flutter, up 530p at 8,164p, and Tesco, up 0.5p at 240p.
The biggest fallers on the index were Hargreaves Lansdown, down 151p at 1,855p, Kingfisher, down 13.25p at 195.95p, Associated British Foods, down 144p at 2,160p, and 3i Group, down 64.5p at 1,088p.