The FTSE 100 has fallen to its lowest level for nine weeks falling 2 per cent amid fears over Vodafone's growth prospects.
In early trading, the FTSE 100 was down 102.5 points, or 2 per cent, at 5,100.6, after falling as low as 5,095 - its worst level since February 28th.
The latest sell-off in Vodafone was sparked on Friday when it cut its forecasts for Germany and Italy. Investment bank Goldman Sachs added to the gloom when it cuts its rating on the stock today.
Oil stocks such as BP also fell alongside a drop in crude prices, and a sharp fall by US stocks added to the bearish overall mood.
Dealers said several factors had hit the market, notably fears a US economic recovery will not flow through to corporate profits, weaker crude oil prices and growing fears about growth prospects across telecom and technology stocks.
"The market's getting hit from all sides," one dealer said, noting that banks and drugs stocks were also suffering.