Large firms have warned they could see sharp losses as coronavirus is rapidly spreading around the world.
In London, the FTSE 100 tumbled 73.36 points, or 1.1% to 6,944.52, falling through the 7,000 mark for the first time in a year.
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The FTSE 250 plunged 353.78 points, or almost 2%, to 20,362.19. Stock markets in France, Germany and Italy all also fell.
Japan’s Nikkie 225 index lost almost 0.8% and the Hong Kong’s Hang Seng dropped by 0.7%.
Neil Wilson, an analyst at Markets.com said, “At present there is no sign of a stabilisation in progress, trying to guess when the bottom is in will be dangerous.”
Diageo announced on Wednesday that coronavirus could cost them in the region of £200m and the companies shares dropped by 1.4%.