The FTSE 100 slumped 1.4% to 6,680 amid fears of an unexpected September rate hike by the US Federal Reserve and a lack of catalysts from corporate results.
The market is said to be expecting a speech from Federal Reserve committee member Lael Brainard, who previously called for rates to remain on hold for longer.
Banking stocks, including Royal Bank of Scotland (RBS) and Barclays (BARC), were pushed into negative territory, falling 4.3% and 3.6%, respectively.
Miners also had a bad start to the week with iron ore producer BHP Billiton (BLT) and Rio Tinto (RIO) down by up to 5.1%.
Commodity stock fallers included Glencore (GLEN), Anglo American (AAL) and Antofagasta (ANTO).
West Texas Intermediate (WTI) crude oil slid 1.8% to $45 and Brent crude oil was 1.7% lower to $47.19 per barrel, respectively. Gold was flat at $1,329 per ounce and copper cheapened 1.3% to $4,541 per tonne.
BLUE CHIP RISERS AND FALLERS
Primark owner Associated British Foods (ABF) stumbled 8.7% to £28.81, despite better-than-expected trading with translational benefits from weaker sterling. It said full-year earnings per share is expected to be ahead of last year, but warned of a higher interest charge next year, due to lower UK long-term bond yields pushing its UK pension scheme into a deficit.
MID CAP RISERS AND FALLERS
SVG Capital (SVI) received an unsolicited offer from private equity firm Harbourvest for 650p per share in cash and urged shareholders to not act immediately. The firm will publish its interim results on 20 September.
John Laing Infrastructure Fund (JLIF) was flat, which was unaffected by NAV per share rising 5% in the first half and pre-tax profit before tax jumping to £72.3 million, which was driven primarily by underlying portfolio growth.
SMALL CAP RISERS AND FALLERS
Clear Leisure (CLP) soared 133.3% to 1.58p after announcing it will focus on monetising assets and recovering shareholder funds in the UK and Italy.
HG Capital Trust (HGT) traded 5.3% higher on positive interims showing a continued strong net asset value (NAV) performance, which was driven by double-digit sales and profit growth across its portfolio.
Cake decoration firm Real Good Food (RGD) delivered a positive trading update with strong order intake its premium bakery business, in the first four months of the financial year. The company also decided to start paying dividends and said it has not seen any material negative impact on its operations following the Brexit vote.
Xcite Energy (XEL) crashed 64% to 2.96p following an announcement that its restructuring of its bonds may leave existing shareholders with very little.
Billing Services (BILL) announced its local exchange carrier (LEC) indicated it will act beyond its consent decree, which may affect the company's revenue and earnings in the current financial year and in the future. Shares declined 25% to 3p.
Investors were concerned about increased costs for Bellzone's (BZM) ferronickel project, which was mainly due to interest on a $13.7 million loan from major shareholder Hudson Global.
TechFinancials (TECH) charged 13.4% higher to 14.7p as operating profit rocketed from $0.10 million to $1.59 million in the first half of this year, driven by higher revenue and profit.
Tern (TERN) was up 4.6% after its subsidiary Device Authority became a Dell IoT solutions partner, which aims to enable IoT solutions that deliver clear returns on investment.
Social media platform MySQUAR (MYSQ) pleased investors following expected significant revenue growth from its gaming business in the next few months due to growing revenue from MyFish and Hawk Hero.
Anglo Asian Mining (AAZ) swung into the black after a record output in silver and copper output. Shares were higher despite a decline in revenue from lower gold bullion sales.