London's leading share index closed 138.8 points, or 1.94%, lower at 7006.9 on Thursday - the biggest fall in percentage terms since June.
The FTSE briefly dipped below the 7,000-mark for the first time since April during a choppy session in the wake of a Wall Street slump on Wednesday and steep declines in Asian markets overnight.
Shares in New York were volatile again on Thursday - briefly looking to stage a recovery from the previous brutal session at one stage before later veering back into the red.
The Dow Jones Industrial Average had seen its worst session for eight months on Wednesday as it fell by 3%, with the S&P slipping by 3% too.
Both extended their losses during the latest session, each down by as much as 1%.
Stock markets in Germany and France also saw further declines.
The FTSE's latest fall added to its decline in the previous session means it has lost more than 3%, or £60bn, over two days. It has lost nearly 7% since the middle of last week.
Donald Trump has reacted to the Wall Street carnage by accusing the US Federal Reserve - led by his personal pick for the job, Jerome Powell - of being "crazy" for announcing a series of interest rate hikes this year.
That prompted International Monetary Fund chief Christine Lagarde to come to Mr Powell's defence, saying that hiking rates was "clearly a necessary development for those economies that are showing much improved growth, inflation that is picking up... unemployment that is extremely low".
Analysts pointed to a cocktail of worries for stock market investors that have been building in recent weeks.
Chief among them is the rising path of US interest rates, which it is feared could put the brakes on the world's biggest economy by adding to borrowing costs for consumers and businesses.
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Adding to the anxiety is the uncertainty caused by Mr Trump's trade war with China as well as the sharp upturn in yields on bonds - parcels of US government debt - which is diverting some investor attention from stocks.