London stock market fell sharply on Monday with the FTSE 100 index ending down 3.58 percent, or 189.45 points lower, to 5,102.58 points.
The market expanded losses following last Friday's 2.34-percent drop on weak U.S. job data as well as re-rising worries over the Italian and Spanish sovereign debt problems.
Borrowing costs for the Italian and Spanish governments have begun to rise again, despite the European Central Bank's decision to purchase their debts.
British banking stocks saw particularly heavy losses due to their exposure to the sovereign debts of some European countries.
Royal Bank of Scotland shed 12.32 percent by the end of the day, ranking top on the blue-chip losers' list. The 81-percent-government-owned bank was among the 17 banks and financial institutions sued by the U.S. regulator over mortgage bonds of massive value.
Two other major British banks Lloyds Banking Group and Barclays, which dropped 7.46 percent and 6.69 percent respectively, were also among the biggest losers.
Meanwhile, newly-released weak economic statistics that deepened global economic woes are overshadowing the market.
An industry survey on Monday showed Britain's service sector slowed sharply in August, with the services purchasing managers' index (PMI) fell to 51.1 from July's 55.4, the biggest monthly fall in more than a decade.
Xstrata led the mining sector lower with a slump of 6 percent. Rio Tinto fell 5.5 percent and BHP Billiton was down 3.84 percent.
Randgold was the only stock seeing a marginal rise on Monday, ending 0.97 percent higher, as safe haven gold's price continued going up.
