A slide on Wall Street and fears of an interest rate rise have pushed the FTSE 100 index of leading UK shares sharply lower. The index finished down 67 points, or 1.5%.
Shares started to slide in morning trading, sparked by news that four of the nine Bank of England policymakers had voted for an increase in UK interest rates earlier this month.
The close vote raised the prospect of a rate rise before the end of the year and a cooling in the housing market.
Bombshell
David Brown, chief European economist at Bear Stearns, said: "The Bank of England has dropped a bombshell on global markets with very strong hints that they are on the brink of a rate rise soon."
Mortgage lenders HBOS, Abbey National, Northern Rock and Bradford & Bingley were among the heaviest fallers, each falling by 4-5%.
And shares in defence giant BAE Systems were 4% lower after reports that a US rival had walked away from exploratory merger talks.
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