Britain’s benchmark index began its first trading session of 2016 with a sharp fall after a 7pc slump on China's stock exchange and heightened tension in the Middle East weighed on financial markets around the world.
Weak economic data from China caused Asian shares to plunge and triggered an early closure of the Shanghai and Shenzhen stock markets.
In just three hours of trading more than £34bn was wiped off Britain's leading companies - compared with a total of £80bn in the last 12 months.
The sell-off comes after factory activity in China contracted for a tenth consecutive month in December, reigniting fears that the world’s second largest economy is slowing down.
The Caixin China Manufacturing Purchasing Managers’ Index dipped to 48.2 last month, falling short of expectations that it would hit 49.0. A reading below 50 indicates contraction, while anything above it indicates growth.
The bad news from China led to a collapse in the price of copper, a metal that is closely tied to the fortunes of the Chinese economy. The commodity slumped 3pc to a three-week low, dragging UK-listed miners into the red.
Anglo American, the FTSE 100’s biggest faller of 2015, began the year at the bottom of the leaderboard, down 6.5pc at 279.9p. Meanwhile its peers Glencore and Antofagasta also slipped 6pc and 3.4pc respectively. BHP Billiton lost 3pc, while Rio Tinto was changing hands 2.9pc lower at £19.22.
Asian-exposed bank Standard Chartered also suffered a sharp fall in early trading, down 4.9pc to 535.9p, while luxury fashion house Burberry lost 3.3pc to £11.55.
Amid a sea of red, only two shares edged higher on the FTSE 100 - Randgold Resources and TUI AG.
Gold miner Randgold Resources climbed 2pc to £42.24 as risk-averse investors rushed to safe haven stocks amid the market mayhem in China. The price of gold rose 1.2pc to $1,073 per ounce.
Brenda Kelly, of London Capital Group, said: “Gold inched higher on Monday, bolstered by safe-haven bids following rising geopolitical tensions in the Middle East that knocked equities and the dollar lower.”
The mining-heavy UK index was not the only stock market reeling from the latest China-led sell-off. The pan-European FTSEurofirst 300 index fell by as much as 2.4pc, while the CAC 40 in Paris lost 2.3pc. Germany's DAX plummeted 3.6pc and the Spanish IBEX tumbled 2.5pc. The Euro Stoxx index of 50 blue-chip eurozone companies slumped as much as 3.1pc.
Elsewhere, the South African rand fell by 1.1pc against the US dollar and stocks in the region shed 2.6pc.
Mike van Dulken, of Accendo Markets, said: “Equity markets have made a rather negative start to 2016, with China making an early appearance to remind us of global growth woes and FX wars, keeping the commodities space under pressure, while geopolitical tensions in the Middle East are adding to existing volatility in the price of oil."
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