Britain's FTSE 100 index slid more than 1 per cent at opening, reflecting Wall Street's biggest-ever points fall overnight.
Banks and drugs were singled out for the largest declines.
The blue chip index initially fell more than 55 points and then extended that to 65.2 points or 1.3 per cent to 4,833.7 by 8.22 a.m. Banks took some 17 points off the index, and pharmaceuticals took off around 12 points.
Traders said London was catching up with the fall in New York. The Dow Jones index was down 520 points at the London close but finished with a 685-point loss at the end of Wall Street's first session since last week's attacks on the United States.
Tesco said half-year profits and sales rose 14 per cent, helped by a push into non-food areas and developing markets. Underlying profit came to £481 million sterling - within market expectations. The shares dipped 1.2 per cent.
Energy company International Power reported improved earnings, in line with analysts forecasts, but said the prospects for 2002 power prices in some markets were not good, sending the shares down 5.7 per cent to 233-3/4p.
Half-year results were also released by drugs firm SkyePharma, fashion retailer Laura Ashley Holdings and engineering firm Cobham, a supplier to the troubled aerospace industry.