The FTSE 100 Index was poised for its biggest loss since the days following the EU referendum as concerns over Hillary Clinton's health and a potential interest rate hike by the US Federal Reserve spooked investors.
London's premier index fell sharply to levels not seen since the start of August, dropping as much as 1.7%. At one stage, all 100 companies listed on the FTSE 100 were trading in negative territory.
Meanwhile, the pound struggled to make gains, trading 0.12% lower at 1.325 against the US dollar, and 0.19% at 1.18 against the euro.
"With little on the economic agenda, a severe bout of panic has struck the global markets, causing the kind of declines not seen since the Brexit," Connor Campbell, a financial analyst at SpreadEx, said.
Stocks across the globe slumped after Democratic presidential nominee Hillary Clinton was diagnosed with pneumonia just weeks ahead of the US election.
The alarm was raised after Mrs Clinton unexpectedly left a 9/11 ceremony in New York on Sunday, and was seen stumbling into her vehicle.
Jane Foley, a senior FX strategist at Rabobank, explained that the news was likely to worry investors "given the uncertainties about trade and foreign policy that a victory from Republican nominee (Donald) Trump would unleash".
Meanwhile, concerns have grown over the likelihood of an interest rate hike by the US Federal Reserve when committee members meet on September 21.
It follows comments by Boston Federal Reserve president Eric Rosengren, who said the US economy would be at risk if the central bank waited too long to raise rates.
Investors are expected to keep a close eye on speeches delivered by Mr Rosengren's colleagues in the coming week for any signs of enthusiasm towards an interest rate hike.
UK stocks were also dragged down by Primark owner Associated British Foods (ABF), which was down more than 6.5%, making it the biggest loser on the FTSE 100.
The company reported that full-year sales took a hit from unseasonable weather, adding that currency movements following Britain's decision to quit the European Union will have both positive and negative repercussions for the group.
ABF said that like-for-like sales at Primark are expected to fall by 2% over the year as warm pre-Christmas weather and a "very cold" March and April dampened its performance.
Meanwhile, a drop in commodity prices took its toll on UK-listed mining stocks. Anglo American, BHP Billiton, Antofagasta and Glencore were amid the biggest fallers on the FTSE 100.
The price of global benchmark Brent crude dropped 1.3% to 47.22 US dollars per barrel on Monday, following news that oil drilling activity was on the rise in the US.
Shares in Barclays were also dragged lower after Investec downgraded its outlook for the company, saying the lender's recovery was "distant and uncertain".
Pharmaceutical companies AstraZeneca, Shire and Reckitt Benckiser were some of the only stocks making gains on the FTSE 100. It comes after Jefferies upgraded its view on AstraZeneca, which is developing a new drug meant to treat lung cancer.