Britain's FTSE 100 share index has tumbled more than two per cent this afternoon, led lower by the banking sector as Barclays slid after worries resurfaced about bad debts, and more weak US economic data hit Wall Street.
By 2.30 pm the FTSE 100 index was down 116 points, or 2.7 per cent, at 4,130.2, accelerating morning losses to eat into its strong rally over the last week.
UK shares were hit after a sharp fall on Wall Street, where the Dow Jones industrial average was down 157 points, or 1.8 per cent, after another batch of surprisingly weak data heightened fears of a setback to economic recovery.
Barclays fell seven per cent after revealing a steep 43 per cent increase in bad debt provisions, largely due to the economic crisis in Argentina. The banking sector took 43 points off the index, with Royal Bank of Scotland down six per cent.
Oil giant Shell was down 4.7 per cent after it reported below consensus profit figures, helping the oil sector take 22 points off the FTSE.
There was a mixed reaction to results from elsewhere. Insurer Aviva jumped 11 per cent, drugs firm Shire Pharmaceuticals added three per cent and healthcare firm Smith & Nephew gained one per cent as results were well received.
But chemicals firm ICI fell five per cent after it issued a profit warning due to temporary production problems at its Quest flavourings and fragrance unit.