The FTSE 100 sank more than 1% as trading got under way, after further falls in the Chinese yuan continued to rattle the market.
After Tuesday’s 1.9% devaluation, China’s central bank cut the guiding rate for the yuan for a second day.
The fall in the yuan has hit commodity prices, which drove down share prices in the big UK-listed mining companies.
The losses were echoed across other major European stock markets, with Germany’s Dax index down 1.7% and France’s Cac 40 index 1.5% lower.
Companies with direct exposure to China came under pressure. Shares in fashion house Burberry, which does big business in China, fell nearly 3%, having dropped more than 4% on Tuesday.
Randgold Resources was one of the few risers in the FTSE 100, climbing 0.8%, after the price of gold rose.
Gold is traditionally seen as a safer asset in times of market turmoil, and the spot price of gold hit a three-week high of $1,119.80 an ounce.