THE climax of a "bearish" week on the markets saw £16.7 billion wiped off the value of the FTSE 100 on Friday, following several days of volatility.
Just a handful of London's top-flight shares avoided the bloodbath while European counterparts saw a similar decline.
The index closed 64.54 points, or 0.92%, lower at 6,939.56.
David Madden, market analyst at CMC Markets UK, said the outlook was "bearish".
"Stocks are firmly in the red heading into the weekend," he said.
"It has been a brutal week for the markets as the global equity rout has shattered investor confidence. Concerns about higher interest rates in the US, global trade tensions and a potential political fight between Italy and the EU have all played a role in the decline.
"The FTSE 100, DAX 30 and CAC 40 are all trading below their respective 200-week moving averages, and that points to very bearish sentiment."
The German DAX was down 0.94% and the French CAC fell 1.29%.
But Fawad Razaqzada, market analyst at Forex.com, said the markets could rebound next week.
He said: "We wouldn't rule out the possibility of a rebound for stocks next week given the extent of this week's drop.
"Clearly, there are some strong companies out there with solid fundamentals which may have fallen below their fair values.
"We think Europe could outperform in the event of a stock market rebound because of the US markets' outsized rally over the past several years."
In London, Royal Bank of Scotland posted a rise in third-quarter profit but the lender suffered a hit to its share price after warning over Brexit.
The lender, still 62% owned by the taxpayer, posted a 14% increase in profits to £448 million in the three months to September 30.
But RBS also took a £240 million impairment charge, including £100 million to reflect the "more uncertain economic outlook" in Britain ahead of Brexit.
British Airways owner International Airlines Group (IAG) said profits were hit by higher fuel costs in the third quarter as it continues to grapple with the fallout from a major cyber attack.
On a pre-tax basis, profits fell 0.4% to 1.42 billion euros (£1.26 billion) in the three months to September.
Shares in the firm closed 1.8p lower at 585.6p.
After a week of volatility, the pound was muted on Friday due to a lack of new developments in the Brexit negotiations, which have become a major catalyst for movements in the currency.
Sterling was 0.08% up against the US dollar, trading at 1.283. It dipped 0.13% versus the euro to 1.125.
Oil prices were heading for a weekly loss on Friday after Saudi Arabia warned of oversupply.
Mihir Kapadia, founder of Sun Global Investments, said the impending sanctions on Iran had spurred an expectation of a shortage in the foreseeable future, "but now Saudi Arabia and Opec have raised concerns of oversupply because of rising inventories".
"This has only emphasised the volatility of the oil market."
The biggest risers on the FTSE 100 were Randgold, up 218p to 6,416p, Paddy Power up 145p to 6,530p, Associated British Foods up 46p to 2,397p and CRH up 33p to 2,170p.
The biggest fallers on the FTSE 100 were Evraz, down 34p to 503p, Ocado down 41.2p to 782.4p, BT Group down 10.95p to 229.6p and Royal Mail down 14.9p to 348.7p.
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