Britain's top shares slid sharply on Wednesday in a broad-based retreat led by resource stocks, notably miners including BHP Billiton after a warning from an Australian rival prompted investors to lock in profits in the former booming sector.
Sentiment in the market was dealt a further blow by comments from Bank of England policymaker Richard Lambert that suggested he was not ready to vote for an interest rate cut.
The FTSE 100 index ended down 96.1 points, or 1.8 percent, at 5,167.8 points - its lowest level since July 8 after its biggest one-day points loss since May 2004.
Mining and oil stocks wiped more than 40 points off the leading index.
Among miners Rio Tinto, BHP Billiton and Anglo American all shed about 4 percent, hurt by worries about the sustainability of rising commodity prices and rattled by a profit warning from Australian miner Newcrest Mining.
Among oil shares BP lost 1.9 percent and Royal Dutch Shell shed 2.4 percent.
But some analysts said the market slide did not presage a lasting retrenchment.
"There's not much institutional selling, although hedge funds are selling. The temptation to lock in a positive year is great," said Graham Secker, equity analyst at Morgan Stanley.
"Everything that's gone up the most has come down the most, like the miners and oil companies. But we still reiterate our end-of-year FTSE target as 5,555. We definitely see this as a buying opportunity."
Dealers said concerns that UK interest rates may remain on hold for longer than some had hoped - demonstrated by minutes from the Bank's October interest rate meeting which showed all nine policymakers voted to keep rates on hold - rattled nerves on the 18th anniversary of the 1987 global stock market crash.
Among mid-cap firms, oil explorers were the biggest fallers, hit by a drilling report from Bowleven, which said it had not found oil at one of its wells. Bowleven shares plummeted just under 40 percent.
Soco International was the biggest faller, down 7.5 percent, Paladin Resources was off by 5.8 percent and Burren Energy closed down 5.6 percent.
Dealers said the sharp Bowleven fall also prompted some trading houses, which deal in contract for difference (CFDs) derivatives, to ask investors to increase the margin on some of their positions to cover the fall. That prompted investors to sell other shares including serviced office company Regus, one of the market's top fallers with a loss of more than 7 percent.
CFDs are geared investments allowing investors to take bigger share positions by paying only a deposit or margin on the full value of the underlying stock.
It was one of the worst days for the FTSE 250 mid-cap index, which fell 2.4 percent, or 185 points.
A similar margin call earlier this year based on a similar disappointing drilling report from Regal Petroleum led to sharp falls in stocks including for Regus.
Also on the downside, utility International Power fell as much as 8 percent after it said it had made an approach with Japan's second-largest trading house Mitsui & Co to acquire an interest in Europe's biggest coal-fired power plant, owned by Britain's Drax Group.
But the shares retraced some of those losses to close 4.2 percent lower at 218 pence after Drax rebuffed the approach.
Pharmaceutical firms outperformed the FTSE's fall, with GlaxoSmithKline down just 0.4 percent against the FTSE's 1.8 percent as investors wagered it would benefit from plans by Britain to buy a vaccine to protect the entire population as soon as any bird flu pandemic emerges. GSK is one of several companies working to develop a pandemic flu vaccine.
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